Alimony is a payment to or for a spouse or former spouse under a divorce or separation agreement. A divorce of separation instrument is one of the following:
- A decree of divorce or separate maintenance or a written instrument incident to that decree
- A written separation agreement
- A decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. This includes:
- Temporary decree
- Interlocutory decree
- Decree of alimony
Federally and in Massachusetts, prior to the TCJA, a taxpayer that paid alimony or separate maintenance payments to a former spouse could deduct the amount of such payments from gross income, and the recipient of such payments was required to include them in gross income. The TCJA repealed both the deduction for alimony paid by a taxpayer and the inclusion of alimony in gross income for the recipient, for federal income tax purposes. These changes apply to any divorce or separation instrument executed after December 31, 2018 and under certain instruments executed on or before December 31, 2018, but, later modified.
For Massachusetts income tax purposes however, Massachusetts adopts the federal rules as they existed on January 1, 2005 with respect to the deduction of alimony payments and the inclusion of such payments in income. Therefore, Massachusetts taxpayers can still take a deduction for alimony payments made to a former spouse on their Massachusetts personal income tax return and recipients of such payments must still include them in gross income for tax years subsequent to the TCJA.
Note: Alimony payments are not to be confused with child support payments. Child support payments are neither deductible by the payer nor taxable to the recipient, for both federal and Massachusetts income tax purposes.
Just as discussed above, relating to alimony income generally, Massachusetts adopts the alimony recapture rule under IRC § 71(f) in effect as of January 1, 2005. That rule applies when alimony payments decrease or end during the first three calendars years after a divorce. In such cases, a taxpayer that pays alimony is subject to the recapture rule in the third year if:
- The total payments made in the third year decrease by $15,000 or more from the payments made in the second year; or
- The payments made in the second year and the third year are substantially less than the payments made in the first year.
In such cases, the recaptured amount must be included in the gross income of the payer and is allowed as a deduction to the recipient spouse in year three.
- M.G.L. Chapter 62, Sections 2(a), (d)(1)
- TIR 18-14: Impact of Selected Provisions of the Federal Tax Cuts and Jobs Act on MAssachustts Personal Income Tax Under Chapter 62
- LR 85-38: Alimony and Child Support, Distinguished
- I.R.C. §§ 62(a)(10); 71, 71(f); 215 relating back to Section 62(a)(10)
- Pub. 504 Divorced or Separated Individuals
- 1986 Tax Reform Act, P.L. 99-514, Section 1843(c)(1), with an effective date of January 1, 1987