Taxes and Alimony
Alimony is the term used for payments made to a separated or ex-spouse as part of a divorce or separation agreement. It is sometimes referred to as "spousal support."
Payments cannot be treated as alimony if the spouses file a joint return with each other. If the divorce was prior to 2019, the payments generally are taxable to the recipient and deductible by the payer. Per IRC Sec 71(b)(1)(B) prior to repeal by the TCJA, a pre-2019 agreement can designate the payments as non-taxable (and non-deductible). If designated as non-taxable, the alimony isn’t considered compensation for IRA contribution purposes.
No Deduction for Alimony Paid Before Final Decree
A taxpayer was denied an alimony deduction for payments he made to his ex-wife, before the final divorce decree was signed. (Milbourn v. Comm., TCM 2015-13)
Two Ways of Defining Alimony Have Been In Effect Since 1985
One for payments under decrees and agreements dated after 1984 and another for payments under decrees and agreements made in 1984 or earlier (and not later changed to incorporate the new rules). TRA ’86 made modifications to the post-’84 rules, as indicated below.