Tax form next to pen on top of stack of hundred dollar bills.

Since time immemorial, there has been an alimony tax deduction, making spousal maintenance taxable to the payee (add income on line 11 of the IRS Form 1040), and tax-deductible to the payor (deduct on line 31. As a result of the 2017 “Tax Cut and Jobs Act,” that is no longer the case for decrees entered on January 1, 2019 onwards.

What does this mean for existing decrees? Nothing – you fall under the current system with an alimony tax deduction. If you’ve been paying alimony under a decree entered in 2018 or earlier, the tax consequences of spousal support will continue to be shifted to the recipient.

Hurry up for Alimony Tax Deduction

But new decrees entered on or after 1/1/2019 fall under the new system, so while those spousal maintenance lines will still exist on the 1040, they will only apply to decrees which are “grandfathered” in, and not to new ones. For new decrees, there is no alimony tax deduction for spousal support, and the payments are tax-free to the payee.

If you obtain your decree of dissolution in the next 4 days (i.e. by next Monday 12/31/2018), you fall under the current system with an alimony tax deduction. And the popular press is full of articles warning people to finish up their divorces now to lock in the current system.

The Colorado legislature has stepped in to modify both the spousal support and child support statutes to reflect this new tax reality. In HB 18-1385 which adds new language to the advisory maintenance language in C.R.S. 14-10-114(3)(b)(I):

“(b) If the maintenance award is not deductible for federal income tax purposes by the payor and not taxable income to the recipient, the amount of maintenance under the advisory guidelines for parties with a combined, monthly adjusted gross income of ten thousand dollars or less is equal to eighty percent of the amount calculated pursuant to subsection (3)(b)(i)(a) of this section.

(c) if the maintenance award is not deductible for federal income tax purposes by the payor spouse and not taxable income to the recipient spouse, the amount of maintenance under the advisory guidelines for parties with a combined, monthly adjusted gross income of more than ten thousand dollars but not more than twenty thousand dollars is equal to seventy-five percent of the amount calculated pursuant to subsection (3)(b)(i)(a) of this section.”

Simply put, for tax-free alimony, the advisory maintenance amount is reduced by 20% when the parties’ combined AGIs are $120,000/yr or less, and reduced by 25% above that threshold.

Tax-Free Maintenance Affects Child Support

Pile of $100 bills under a gavel with the words "Child Support".Pile of $100 bills under a gavel with the words "Child Support".

The Colorado child support guidelines have also been modified. C.R.S. 14-10-115(3)(a)(II) provides that if alimony is taxable, the full amount is deductible as normal, but if there is no alimony tax deduction, then the payor receives a 1.25 multiplier against the amount actually being paid. This means, for example, that a $1000 maintenance obligation which is not tax-deductible results in $1250 being deducted from the payor’s income for purposes of child support.

And the same happens in reverse for the payee: per C.R.S. 14-10-115(5)(a)(I.5), tax-free spousal support is plussed up by that same 1.25 multiplier, so that $1000 of tax-free maintenance received is treated as $1250 of income.

While this is understandable, it is also curious in that child support has long treated all income the same, whether taxable or not (e.g. military BAH may result in thousands of dollars of tax-free income per month, but a dollar still counts as a dollar w/o any multiplier).

Our spousal maintenance article in the Colorado Family Law Guide has been revamped to include a lengthy discussion of this new change to the alimony tax deduction, or see our Alimony & Child Support Tax article.

FAQ on the Alimony Tax Deduction

Is alimony tax deductible?

It depends. For decrees entered prior to January 1, 2019, spousal maintenance is tax-deductible to the payor and taxable to the payee. For decrees entered after that date, the payments are tax-free and there is no alimony tax deduction.

Is spousal support tax deductible?

In Colorado, spousal support is the same as maintenance, so for decrees entered before January 1, 2019, the payments are tax deductible to the payor and taxable to the recipient.

Who pays tax on alimony?

The payee who receives alimony does not pay taxes when the decree was entered on or after January 1, 2019. The spouse paying maintenance pays taxes on the income and does not receive a deduction for the alimony payments.

Is child support tax deductible?

No. Child support is neither tax deductible to the payor, nor taxable to the payee.

Where do you put alimony on tax return?

Alimony paid pursuant to a divorce decree entered on or after January 1, 2019 is not tax-deductible, so does not go on the tax return. For divorce decrees entered prior to that date, the payor deducts spousal support from income on the 1040 Schedule 1, line 19, and the payee claims the alimony as income on Schedule 1, line 2.

Award-Winning Colorado Springs Alimony Lawyer

Graham.Law TeamGraham.Law Team

U.S. News & World Report calls Graham.Law one of the Best Law Firms in America, and our managing partner is a Colorado Super Lawyer. Our family law attorneys have years of experience helping clients navigate the Colorado legal system. We know Colorado divorce & family law inside and out, from complex multi-million dollar property or child custody cases to basic child support modifications.

For more information about our top-rated El Paso County family law firm, contact us by filling out our contact form, calling us at (719) 630-1123 to set up a free consult, or click on:

Colorado Family Law. Period.