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Can I still take a tax deduction for my spousal support payments?

Tax day is nearly here, both nationwide and in California. With all the rumors floating around about the alimony deduction, you may be uncertain about whether or not you can still deduct your spousal support payments from your federal income tax. The answer is, yes, you can.

It is true that the Tax Cuts and Jobs Act that Congress passed and President Trump signed into law last December eliminated the alimony deduction. It also eliminated the necessity for those receiving spousal support to claim it as income and pay tax on it. However, as reported by Market Watch, the new law does not apply to you if your divorce or legal separation is already final of if it becomes final this year. It also consequently makes 2018 what many divorce experts are calling "a wild year for divorce."

2018 consequences for alimony payors

If you will pay spousal support a/k/a alimony under the terms of your divorce, but it is not yet finalized, it is in your best interests to make sure it becomes finalized before Dec. 31, 2018. In this way, the old law will apply to you and you can deduct those payments from your federal income taxes next year and on into the future.

To make sure the old law applies, however, you also must make sure that your divorce documents contain the proper wording, including the following:

  • Your payments must go to or for the benefit of your ex-spouse.
  • You must pay them in cash or an equivalent of cash.
  • Your documents must designate them as spousal support or alimony payments.
  • Your documents must not imply in any way that the payments are child support.
  • Your payments must stop when your ex-spouse dies or at a future date certain, whichever occurs first.

2018 consequences for alimony recipients

If you will receive spousal support under the terms of your as yet unfinalized divorce, it is in your best interests to "drag your feet" and make sure your divorce is not finalized until Jan. 1, 2019 or later. In this way you will not have to list it as income on your federal tax return and pay tax on it.

Sadly, the new tax law adds one more contentious issue between you and your soon-to-be ex-spouse. One of you must win and one of you must lose the tax battle. This is general information only and is not intended to provide legal advice.

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Law Offices of Diane J.N. Morin
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