The Tax Cuts and Jobs Act was signed into law in December 2017. Some portions of the Act took effect commencing January 1, 2018. Others, such as changes to how the federal government allows alimony to be treated, took effect on January 1, 2019.
Prior to December 31, 2018, alimony payors traditionally deducted the alimony paid from their personal income reported to the IRS and alimony recipients included the alimony received in their personal income reported to the IRS, effectively shifting the tax burden of the alimony award to the recipient spouse and their smaller tax bracket. Shifting the tax burden effectively allowed families to benefit from monies that would otherwise remain in the hands of the federal government.
Commencing January 1, 2019, alimony payors are no longer able to shift the tax burden to the recipient spouse. The recipient spouse is no longer able to include the alimony as income for purposes of determining income tax liability and the payor spouse is no longer able to deduct that sum from his or her income.
If you are an alimony payor and may need to modify your alimony obligation in the future, you still have the option of paying taxable, deductible alimony, since your obligation to pay arose prior to January 1, 2019. In any modification you have, you can elect to treat your new alimony amount as taxable and deductible. If you divorce your spouse after January 1, 2019, and have never paid taxable, deductible alimony to your current spouse, you do not have the option to shift the tax burden to your spouse for the alimony you pay.
