Will I Be Required To Pay Taxes On Spousal Support?

Spousal support in California, which is also known as alimony, is a payment ordered by the court from one spouse to the other spouse. The payment is intended to help the receiving spouse pay their monthly expenses, and support can be awarded in cases involving married couples or domestic partners who have registered their domestic partnership with California’s Secretary of State. When support is paid from one spouse to the other, the California Courts describe the support as spousal support. When it is paid from one domestic partner to the other, then the California courts describe the support as domestic partner support. If you are in a situation where you will be paying or receiving support, you are likely wondering whether you will be required to pay taxes on the support? The answer to that question depends upon whether you are the party paying or receiving the support, and the way this works changed recently under federal law. Our San Jose alimony lawyers can provide you with more information.

Will You Be Receiving Support Payments? 

If you are the party who will be receiving support payments, you should know that you will not be required to pay taxes on the amount you receive. If you speak with a friend or family member who received support in a divorce that occurred prior to a few years ago, it is important to know that the spouse who received support was required to pay taxes on it. The taxation of spousal support changed relatively recently so that the party receiving the support payment is not responsible for paying federal taxes on the amount received, and the amount received does not count toward the recipient spouse’s taxable income when it comes time to file federal income taxes.

Will You Be Paying Support to Your Ex?

 If you are the party who will be making spousal support or domestic partner support payments to your ex, then you will need to plan to pay taxes on the amount that you are paying to your ex. These support payments will be counted in with your income, and you will be responsible for income taxes on any amount paid to your ex as a support payment when you file your income taxes. Prior to the passage of the Tax Cuts and Jobs Act (TCJA), the paying spouses were not actually required to pay taxes on spousal support or alimony since the recipient spouse was taxed. However, any current divorce or separation that  results in the court awarding domestic partner support or spousal support in San Jose will require the paying spouse to be responsible for income taxes on the amount paid.

How the Tax Cuts and Jobs Act Changed Support Taxation 

With the passage of the TCJA, starting on January 1, 2019, the IRS clarified that “alimony or separate maintenance payments are not deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if made under a divorce or separation agreement executed after December 31, 2018.”

The change in the law does not apply to divorce or separation agreements involving support payments prior to December 31, 2018 unless the parties have since modified the support agreement after this date in a way that requires the paying spouse to be responsible for taxes or that changes the terms of the payments themselves.

Contact a Spousal Support Lawyer in San Jose 

If you have questions about alimony or taxes on support, one of the San Jose spousal support attorneys at Foster Hsu, LLP can speak with you today.

Sources:

selfhelp.courts.ca.gov/spousal-support

irs.gov/newsroom/tax-cuts-and-jobs-act-a-comparison-for-businesses#:~:text=The%20Tax%20Cuts%20and%20Jobs,the%20changes%20and%20plan%20accordingly

irs.gov/forms-pubs/clarification-changes-to-deduction-for-certain-alimony-payments-effective-in-2019