Have you heard the news about the alimony tax deduction? It is going away for divorces finalized after December 31, 2018. But fear not! If you and your spouse act smartly and quickly, you can still lock in your alimony tax deduction.
What is the Alimony Tax Deduction?
The alimony tax deduction is currently enshrined in 26 U.S. Code section 215. It states that alimony (as opposed to child support or distribution of property) can be tax deductible to the payor and taxable to the payee. This means that the person who pays alimony will pay less in taxes, and the person who receives alimony will pay taxes on it as if it were regular income.