Tax payable on alimony

My alimony settlement was originally agreed in 2016 so have to pay tax on the payments I receive.
If I now agree to a pay-off figure with my ex husband, would that lump sum be taxable, bearing in mind new alimony agreements are now not subject to taxation?
Thanks for any advice :slight_smile:

Yes, any alimony payments made pursuant to an agreement or court order entered on or before 12/31/18 are taxable to the recipient and deductible by the payor.

If you modify your alimony terms now to include a lump sum payout, then the amendment would be subject to the “new” non-taxable alimony rule that has been in effect for all alimony agreements or court orders executed or modified after 12/31/18. You must include in the amendment that the IRS nontaxable alimony rule applies to the amendment.

An amendment will also mean that the payment of the lump sum is no longer tax deductible by your ex-spouse.

For alimony terms in a separation agreement, you must execute an amendment to the separation agreement.

For alimony terms in a court order, you must file a motion to modify the alimony order and have a new modified court order.

Anna Ayscue

Attorney with Rosen Law Firm Cary • Chapel Hill • Durham • Raleigh • Wake Forest

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