2019 Changes to Tax Treatment of Alimony


Alimony is financial support a higher-earning spouse pays to support a lower-earning spouse during or after a divorce, or both. In Nevada, the family court will consider awarding alimony if one of the spouses is unemployed, not financially stable, or for some reason, unemployable.

Alimony is not automatic in a Nevada divorce, but if a lower-earning spouse asks for it, the judge will consider the one spouse’s need for financial support, and the wealthier spouse’s ability to pay it. In Nevada, there are two types of alimony: 1) general alimony (helps the supported spouse maintain their standard of living), and 2) rehabilitative support, which helps by supporting the spouse while he or she obtain education or training so they can become financially independent.

Is Alimony Tax Deductible?

For many years, alimony was tax deductible for the paying spouse and counted as taxable income for the supported spouse, but as of January 1, 2019, there were sweeping changes in the law. As of January 1, 2019, alimony is not tax deductible for the paying spouse, and the supported spouse no longer counts it as income.

According to the Internal Revenue Service (IRS): "You can't deduct alimony or separate maintenance payments made under a divorce or separation agreement (1) executed after 2018, or (2) executed before 2019 but later modified if the modification expressly states the repeal of the deduction for alimony payments applies to the modification. Alimony and separate maintenance payments you receive under such an agreement are not included in your gross income.”

The changes in the tax treatment of alimony impact high-net-worth individuals the most, specifically the supporting spouses (usually the husband), who are paying the alimony. Under the new law, which impacts divorce agreements entered into after January 1, 2019, the wealthier spouses are responsible for paying taxes (through their income taxes) on the money used for alimony payments, as opposed to deducting them as they did under the old law.

To learn more, see IRS Publication 504, “Divorced or Separated Individuals.” For professional, legal assistance with your divorce proceeding, contact our firm to meet with a Henderson family lawyer.

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