A legal separation or divorce can bring changes to how you file your taxes, such as: B. Your login status. Depending on when the legal arrangement was made, it will also affect whether the payments need to be reported on a federal tax return. Each state has its own filing requirements for alimony or separate alimony, but here we look at those for your federal tax filing with the Internal Revenue Service.
The Tax Cuts and Jobs Act 2017 (TCJA) changed the taxation rules for alimony and separate alimony payments. Those specified in agreements dated January 1, 2019 or later are no longer counted as a deduction by the payer and as income by the recipient. The same applies to agreements amended after 2018, in which the amendment “explicitly states” that the payments “are not deductible by the service provider or added to income by the recipient”. These applicants are not required to report the payments on their income tax returns.
However, payments specified in agreements prior to January 1, 2019 must be reported by both parties on their tax returns or the applicant may be subject to fines and penalties from the IRS. The process is relatively simple, but each party fills out a different section on their Schedule 1 (Form 1040) to indicate whether it should be deducted from or added to income. Here we take a look…
Where alimony payments or separate alimony payments are to be included in tax returns
Applicants who are required to report alimony or separate alimony payments must complete an Supplemental Income and Income Adjustment Schedule 1 (Form 1040). This information will then be reflected on your Form 1040 on line 10b.
For the person making the payments, you must enter the amount of money paid during the year in Part II, Income Adjustments, on line 19a, “Support Paid.” It is important that you include the recipient’s Social Security Number (SSN) on line 19b as this may result in a $50 penalty. Also, the deduction can be denied, the IRS warns. On the following line, 19c, you need to write the date of the original agreement.
If you paid child support or separate child support to more than one person, you must include a statement showing the amount paid to each additional person and their SSN or ITIN. For more information, see Publication 504, Maintenance section.
For the person receiving alimony or separate alimony, you must enter the amount of money received during the year in Part I, Additional Income, on line 2a, “Alimony Received.” In line 2b you must enter the date of the original agreement.
In the event that you receive alimony and/or separate payments from more than one person, the IRS directs that you write the information for the person from whom you receive the most income on Schedule 1 (Form 1040) and then attach a list of the dates of the other agreements.