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Spousal Maintenance No Longer Deductible

Spousal maintenance is a payment that a higher-earning spouse pays to a former spouse under a divorce agreement. In Texas, spousal maintenance is awarded on a case-by-case basis. Generally, it may be awarded if the higher-earning spouse was convicted of family violence in the past two years, if the marriage lasted at least 10 years and the lower-earning spouse is disabled or caring for a disabled child, or they cannot meet their basic needs, or both spouses agree that spousal maintenance will be paid for a certain period.

For decades, spousal maintenance was tax-deductible for the paying spouse and counted as income for the receiving spouse; this offered a financial incentive for higher-earning spouses to pay spousal maintenance but on January 1, 2019, there were sweeping changes in the law.

Alimony No Longer Tax-Deductible

According to the Internal Revenue Service (IRS), “Amounts paid as alimony or separate maintenance payments under a divorce or separation agreement executed after 2018 won’t be deductible by the payer. Such amounts also won’t be includible in the income of the recipient.” Per the IRS, payments that are not alimony include:

  • Child support
  • Noncash property settlements
  • Payments that are a spouse’s portion of community income
  • Payments made to maintain the payer’s property
  • Use of the paying party’s property
  • Voluntary payments that are not required under the divorce agreement

“What about child support?” you might ask. “Child support is never deductible and isn’t considered income. Additionally, if a divorce instrument provides for alimony and child support, and the payer spouse pays less than the total required, the payments apply to child support first. Only the remaining amount is considered alimony,” according to the IRS.

Will spousal maintenance be awarded in your divorce case? To learn more about this subject and how it applies to your divorce, contact our firm at (940) 400-0475.

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