Dear Carolyn,
With COVID-19, my salary has been reduced. I need to get my alimony reduced. I am paying court-ordered alimony of $2,100 per month. I am worried about the tax deduction for alimony if I seek a modification. I heard the law changed on the deductibility of alimony if you change your existing order. I really can only afford to pay $1,100 now, but I still need the tax deduction. Can I reduce my alimony and still get an alimony deduction for what I pay to my ex?
Carolyn Answers,
This modification situation can be tricky, but is doable. Technically, you need to approach the reduction correctly under the Tax Cuts and Jobs Act (TCJA). The TCJA eliminated the alimony deduction for new orders and agreements after Jan. 1, 2019. Still, TCJA provided a “grandfather provision” for your situation (if the requirements are followed precisely).
You need to file a motion with the court for alimony reduction based upon change of circumstances. You will need a new alimony court order to modify the old one (pre-Jan. 1, 2019). You cannot sidestep to a private agreement for alimony and maintain the deduction in all likelihood. Stay with the court order as the mechanism for the obligation. IRS Publication 504 (unofficial guidance) gives four examples; in following those examples, I think it is wise to stick to a court order for modification if the deductible alimony is in a court order. There is no official IRS guidance at the writing of this Ask Carolyn on the “grandfather provisions.”
Finally, unless your modified alimony court order elects to make your alimony non-deductible to you, you will continue to be able to deduct your alimony under the new court order.
Send your questions on family law and divorce matters to “Ask Carolyn…” at askcarolyn@rhinotimes.com, or P.O. Box 9023, Greensboro, NC 27427. Please do not put identifying information in your questions. Note that the answers in “Ask Carolyn” are intended to provide general legal information, and the answers are not specific legal advice for your situation. The column also uses hypothetical questions. A subtle fact in your unique case may determine the legal advice you need in your individual case. Also, please note that you are not creating an attorney-client relationship with Carolyn J. Woodruff by writing or having your question answered by “Ask Carolyn…” “Ask Carolyn…” will be a regular column, but not necessarily weekly.
