What is the general tax implication of alimony received?

The general tax implication of alimony received is that it is included in the recipient's gross income unless specified otherwise in the divorce or separation agreement. This means that the recipient must report the alimony as income when filing their tax return.

Prior to the tax law changes implemented in 2018, alimony payments were deductible for the payer and must be included in the gross income of the recipient. However, under the Tax Cuts and Jobs Act of 2017, for divorce agreements executed after December 31, 2018, alimony payments are no longer deductible for the payer, and therefore the recipient does not include these payments as income. Nevertheless, the key takeaway is that any alimony received in the context of divorce agreements made before this change is generally taxable to the recipient unless the agreement explicitly states otherwise.

This reflects a fundamental aspect of tax legislation regarding alimony – it is primarily treated as taxable income unless exclusions are specifically indicated in the divorce settlement. The implications of this ruling have significant tax consequences for both the payer and the recipient that must be considered during tax planning and filing.