Can I deduct alimony paid in 2019?

July, 05 2019 by Selena Quintanilla, CTEC

So, Selena... 

My divorce was finalized in November of 2018. Per our agreement, I will begin making alimony payments in November of 2019 and will be paying a substantial amount for years to come. I was counting on taking a deduction for the payments on my taxes to lessen the sting, but heard that the new tax law did away with that option.  

Will I be able to deduct alimony payments under the TCJA? 

Ben 

So, Ben... 

You're right. The TCJA did make a significant change to how alimony is reported and deducted. In short, since the payments received are no longer required to be reported, payments made are no longer deductible − in some cases.  

Given the information you provided, it sounds like you will still be able to take the deduction.  

Here's why: 

The changes made to alimony under the TCJA apply to divorce agreements finalized after December 31st, 2018. Prior to the change, recipients of alimony were required to report the payments as taxable income, and the payer was able to deduct the amount they paid to reduce their tax liability. Since your divorce was settled in 2018, these rules will be the same for you. Keep in mind that if you and your ex-spouse modify this agreement in the future, the reporting and deductibility of these payments will remain the same unless either of you makes specific mention of the TCJA in the adjustment.  

If your ex requests the agreement be modified to fit the new law, you may want to discuss reducing the amount of alimony you're paying, especially if the payments are a substantial bit of your income. On the upside, you were given a year to get settled before paying into alimony which is more than most.  Making smart money moves during this time can also lessen the sting of what you’re going through.