Question

Ted earned $150,000 during the current year. He paid Alice, his former wife, $75,000 in alimony. The couple divorced in 2016. Under these facts, the tax is paid by the person who benefits from the income rather than the person who earned the income.TrueFalse

Answer 1

Answer:

The answer is: True

Explanation:

Tax law was changed for the 2019 tax year, (Tax Cuts and Jobs Act 12-22-2017), alimony is no longer tax deductible nor the recipient has to report them as income. This change in the law will be in effect from 2019 through 2025.

The only exceptions that apply are those couples who had finalized their divorce agreements before the end of 2018. Since Ted and Alice got divorced in 2016, the change doesn´t apply to them.