Is Alimony Taxable
Published on May 16, 2025
Published by
Reviewed by
Sparsh Ganeriwala, an IRS Enrolled Agent with over 12 years of expat tax experience, specializes in filing US taxes for Americans living in Canada, US/Foreign Trusts, and GILTI Tax.
Table of Contents
Does living abroad change the way alimony is taxed?
Not really—but when your divorce was finalized absolutely does. If your divorce or separation agreement became final before January 1, 2019, alimony is considered taxable income for the person receiving it and deductible for the one paying.
This rule still applies even if either party is living outside the US.
If the divorce was finalized on or after January 1, 2019, the tax treatment flipped: alimony is no longer taxed for the recipient, and the person paying can’t deduct it either. This change came with the Tax Cuts and Jobs Act (TCJA), and it remains in effect today—regardless of where you reside.
What if the agreement changed after 2018—do the new rules apply?
Only sometimes.
If a divorce finalized before 2019 is modified after 2018, the new rules will only apply if the updated agreement specifically says so. If there’s no mention of following the TCJA rules, the IRS will continue applying the original tax treatment.
Why is it important to have the alimony terms clearly spelled out?
Because the IRS won’t assume anything. If alimony payments are not legally documented in a divorce decree or formal court agreement, the IRS may deny deductions or decide those payments don’t qualify as alimony for tax purposes.
To be accepted by the IRS, your agreement should:
- Clearly define the amount and timing of payments
- Confirm the payments are for spousal support—not child support or property division
- Include a condition that payments end upon the recipient’s remarriage or death
Even changes to an agreement should be formally recorded to maintain clarity for both US and local tax filings.
Do state tax rules differ from the federal alimony rules?
Yes, and that’s where things get a bit complicated. While the federal rules changed in 2019, some states did not follow suit. That means alimony could still be taxable or deductible at the state level, depending on where you or your ex-spouse live.
For example:
- California: Still treats alimony as taxable to the recipient and deductible for the payer
- New York: Follows a similar approach
- Massachusetts: Mirrors federal rules—no tax on alimony for post-2018 agreements
Keep in mind, child support is never taxable, regardless of state or federal law.
If I receive alimony overseas, do I still pay US tax on it?
That depends on the timing of your divorce:
- Agreements before 2019: You must report alimony as taxable income on your US tax return
- Agreements in 2019 or later: Alimony is not considered income, so you don’t report it
This rule applies no matter where you live—but your country of residence might tax alimony differently, so you’ll need to look at local laws as well.
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Could I end up paying tax in both the US and my country of residence?
Yes, that’s possible—but there are ways to avoid being taxed twice. If your new country taxes the alimony you receive, and the US does too (for pre-2019 divorces), you may be able to claim a Foreign Tax Credit (FTC) on your US return to offset what you paid abroad.
Are there international agreements that change how alimony is taxed?
Some countries have tax treaties with the US that deal specifically with alimony. These treaties can override domestic rules to prevent double taxation or clarify which country has the right to tax the payment. If you’re in a treaty country, it’s worth checking the specific language—or having a tax advisor do it for you.
What happens when the person paying alimony lives overseas?
If you’re entitled to alimony but your former spouse now lives in another country, getting those payments may be more difficult. US court orders don’t automatically apply abroad, and many foreign governments won’t enforce a US divorce decree unless it’s formally recognized in their legal system.
You may need to go through a local court process in the payer’s country to have your agreement accepted. This often requires hiring a lawyer who understands that country’s family law system and how it interacts with US judgments.
Do foreign payments create additional financial complications?
Yes, cross-border alimony often comes with its own set of headaches.
If payments are being made in a different currency, fluctuations in exchange rates can affect the amount you actually receive each month. For example, the same payment in euros or pounds might be worth more or less in US dollars depending on the current rate.
International bank transfers also tend to include fees, and some take several days to clear. Combined, these factors can result in you receiving less than expected, even when your former spouse sends the full amount. Tracking those payments can also be tricky, especially if your bank statements don’t provide full transfer details.
If an alimony agreement is updated, does the tax treatment change too?
It depends on when the original divorce was finalized. For divorces completed before 2019, alimony is generally deductible for the payer and taxable for the recipient.
However, if you update the agreement after that point, and the new version explicitly says it follows the 2019 tax law, the tax treatment changes: the payer can’t deduct the payments, and the recipient no longer includes them as income.
If the divorce happened on or after January 1, 2019, those changes already apply by default, and modifying the agreement doesn’t impact how alimony is taxed.
One important note: large decreases in payments during the first three years of a divorce could trigger something called alimony recapture. This means the IRS could ask the payer to return some of the deductions they previously claimed. It’s a technical rule, but worth discussing with a tax advisor if payments change significantly.
What options do payers and recipients have to manage alimony more efficiently?
Whether you’re paying or receiving alimony, you may be able to adjust how it’s handled to reduce tax and financial pressure—especially if you’re living abroad.
For payers with pre-2019 agreements:
- Time payments carefully to align with higher-income years for a stronger deduction.
- Avoid sharp payment drops to steer clear of recapture rules.
- Keep clear documentation for IRS reporting.
For payers under post-2018 agreements:
- Consider lump-sum payments rather than monthly ones to simplify the process.
- Negotiate alternate arrangements like larger property transfers instead of regular spousal support, since there’s no longer a tax deduction to consider.
For recipients:
- Plan around the fact that alimony isn’t taxed under newer agreements. This affects how much income you report, which in turn can impact eligibility for certain tax credits.
- Build a financial cushion, especially if payments are coming from a foreign account or through unpredictable transfer methods.
- Invest carefully, especially if you’re relying on alimony as a major part of your income.
What should expats consider before making or receiving changes to alimony?
If either party in a divorce lives abroad, there are added layers of legal and tax complexity. Before making any changes, make sure you understand:
- How local laws in the other country treats US divorce orders
- Whether alimony is taxed in the payer’s or recipient’s country
- How to track payments and maintain supporting documentation
- What the IRS requires in terms of deductions or reporting
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