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?

Answer 1

Answer:

Explanation:

The alimony given is a tax-deductible expense for the person paying the alimony if a divorce is finalized before 2019 and before Jan 31, 2018.

Alimony payments made for divorce implemented after Jan 31, 2018, are said not to be tax-deductible with regards to the amended law.

Therefore in the scenario presented, Nancy pays alimony to Nathan will be tax-deductible income to him because the divorce was 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.

Had it been that they have not filed for divorce, only that they are separated but however still jointly live together, then they both file for tax return jointly or separately together due to the sense that they are considered as a married couple for the entire year.

In a case whereby the couple is divorced in 2019, then alimony payments received are not tax-deductible with regards to the current law.