Alimony

Individuals who receive alimony from a former spouse usually do not have Federal or State income taxes withheld from the alimony compensation that they receive.

Such individuals should make estimated income tax payments on the alimony income they receive quarterly. Otherwise, they may receive huge, unexpected income tax bills when their income tax returns are filed the following April.

  1. Calculate Your Net Alimony Income
    Add the alimony payments that you received during the quarter. This is your Net Income.
  2. Federal Self-Employment Tax
    Alimony income is not subject to the Federal Self-Employment Tax. Therefore you can skip Step 1(a)(2) in your Estimated Tax Payment calculations.

Proceed to Estimated Tax Payments

The Tax Cuts and Jobs Act (TCJA) of 2017 made a significant change in the treatment of both alimony payments and alimony income. Effective for new divorce and separation agreements signed after December 31, 2018, alimony paid to a former spouse will no longer be deductible by the payer. Alimony payments received will no longer be included in the recipient’s gross income. This change does not affect divorce and separation agreements signed prior to January 1, 2019.

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