Alimony payments for divorce agreements entered into after 2017, the deduction is no longer available to payors, nor is alimony taxable to recipients. However, payments under pre-2019 agreements remain deductible by payors and taxable to those who receive it. And, if an older agreement is modified before 2019, the tax consequences remain the same. The message for clients who are getting divorced or separated in 2018 is clear. Incorporate this into your negotiations to arrive at the intended results for any given situation.
Finally, there’s one more noteworthy point about the new rules for alimony payments. Unlike most other tax changes for individuals that sunset after 2025, this provision is permanent. Once the ink on the agreement’s signatures dries, there’s no going back.
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