💔Going through a divorce is tough enough, but it’s important to consider the financial implications, including the tax treatment of child support payments and alimony.
Here’s what you need to know:
💰 Alimony Payments
- Alimony payments were tax-deductible for the payer and taxable income for the recipient before 2019.
- A written agreement with specific requirements was necessary to claim the alimony deduction.
- Not all payments under divorce/separation agreements are considered alimony.
👨👧 Child Support Payments
- Child support payments are not tax-deductible for the payer and are not taxable income for the recipient.
- The payment is treated as nondeductible and nontaxable if alimony and child support are combined.
📜 Changes in Tax Law
- Trump’s 2017 Tax Cuts and Jobs Act (TCJA) changed the tax treatment of alimony payments in 2019.
- Payers can no longer deduct alimony payments, and recipients don’t owe taxes on payments for divorce agreements executed after December 31, 2018.
👉Don’t let post-divorce finances be a headache. Please work with us to ensure compliance with relevant tax laws and avoid challenges from the IRS.
📅 Schedule your tax assessment today and find out how recent changes in tax laws may affect your divorce settlement!