The Tax Cuts and Jobs Act changes the treatment of alimony paid and received.

Current Law

Through December 31, 2018

Individuals can deduct an amount equal to alimony or separate maintenance payments paid during the year. This deduction is above the line; it reduces AGI. Also, alimony payments received during the year are includible in the gross income of the recipient. These rules do not apply to child support payments.

New Law

Effective for tax years beginning after December 31, 2018

In general, for divorce or separation instruments executed after December 31, 2018, the deduction for payment of alimony is disallowed and the inclusion in gross income for receipt of alimony payments will not apply.

Commentary

There is a special rule for any divorce or separation agreement that is in effect before December 22, 2017 (date of enactment of the 2017 Tax Cuts and Jobs Act), that is executed after December 31, 2018, or executed on or before December 31, 2018, and modified after December 31, 2018, if the modification expressly provides that the amendments made by the 2017 Tax Cuts and Jobs Act apply, then the rules of the new tax law apply. It is recommended that you also consult with your attorney when dealing with divorce issues.

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Curt Bach
Curt Bach
I joined Hawkins Ash CPAs in August 2010, and am currently a manager in the firm’s Medford office. I provide a variety of tax services, including trust and estate tax preparation and planning. I have more than nine years of experience providing audit and tax services to nonprofit organizations, governmental entities and small businesses. I am a member of our firm’s tax committee and not-for-profit service group.

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