Question

Nathan and Nancy were divorced in 2016. The divorce agreement required Nancy to pay Nathan $5,000 a month in alimony. Based on your tax research is the alimony received by Nathan taxable income to him? What if they continued to live together during 20016 and 2017? Would your answer change if the couple lived apart but divorced in 2019? ACCOUNTING

Answer 1

In case a divorce is finalized before 2019 and before Jan 31, 2018 then alimony given is tax deductible expense for the person paying the alimony. For alimony payments made for divorce executed after Jan 31, 2018, it is said not to be tax deductible as per the amended law.

Thus in the present case Nancy pays alimony to Nathan will be tax deductible income to him due to divorce finalized in the year 2016 as it is before Jan 31, 2018.

If they have been divorced and still they continue to stay together during 2016 and 2017, then alimony payments are tax deductible.

If they have not filed for divorce and are seperated but however lives jointly together then they both file for tax return jointly or seperately together as they are considered as a married couple for the entire year. If the couple is divorced in 2019, then alimony payments received is not tax deductible as per current law.