How Does Receiving Alimony Affect My Taxes?

We all know life can be complicated, and while taxes often touch upon the most joyful moments in life, many of our toughest times have tax implications as well. “Real Talk” is a series that answers the tax questions that you may find harder to ask. TurboTax is here for you during your life changes.

My divorce just went through, and I will get alimony from my ex-husband. Is the alimony taxable?

Questions about divorce and tax implications are very common, so I am glad you asked. If you are newly divorced and are receiving alimony, here are a few things you should know.

When you receive alimony, you have to claim it on your tax return if your divorce was final by December 21, 2018. But if the divorce was after, then it would not be reported as income. On the other hand, if you pay alimony, you will only be able to deduct it on your taxes if your divorce was already final in 2018. Child support is never deductible and isn’t considered taxable income. 

If alimony payments are concentrated in the first year or two after divorce, the IRS may consider the money to be non-deductible property settlement. And if alimony is scheduled to end within six months of a child’s 18th or 21st birthday, the IRS may consider the alimony to be disguised as child support. Also, rolling your support together into “family support” in your agreement makes it fully taxable to you and tax-deductible to your ex, just like alimony.

Life changes like a divorce can bring up unknown questions, but don’t worry about knowing these tax laws. TurboTax will help you through your life changes and will ask you simple questions, and give you the tax deductions and credits you deserve based on your answers. Meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.