How does Alimony from a Divorce settlement Line 11 & 31 affect Covered CA Subsidies?

Alimony counts as MAGI income as it’s on Line 11 of your 1040 Tax Return.

Taxpayers should be aware of tax law changes related to alimony and separation payments. These payments are made after a divorce or separation. The Tax Cuts and Jobs Act changed the rules around them, which will affect certain taxpayers when they file their 2019 tax returns next year.

Here are some facts that will help people understand these changes and who they will impact:

  • The law relates to payments under a divorce or separation agreement. This includes:
    • Divorce decrees.
    • Separate maintenance decrees.
    • Written separation agreements.
  • In general, the taxpayer who makes payments to a spouse or former spouse can deduct it on their tax return. The taxpayer who receives the payments is required to include it in their income.
  • Beginning Jan. 1, 2019, alimony or separate maintenance payments are not deductible from the income of the payer spouse, or includable in the income of the receiving spouse, if made under a divorce or separation agreement executed after Dec. 31, 2018.
  • If an agreement was executed on or before Dec. 31, 2018 and then modified after that date, the new law also applies. The new law applies if the modification does these two things:
    • It changes the terms of the alimony or separate maintenance payments.
    • It specifically says that alimony or separate maintenance payments are not deductible by the payer spouse or includable in the income of the receiving spouse.
  • Agreements executed on or before Dec. 31, 2018 follow the previous rules. If an agreement was modified after that date, the agreement still follows the previous law as long as the modifications don’t do what’s described above.

More Information:
Publication 504, Divorced or Separated Individuals
Publication 5307, Tax Reform Basics for Individuals and Families

3 comments on “Alimony – From a Divorce Settlement – Line 11 & 31

  1. I recently was divorced as of January 6. I have lost my health insurance. I’m on Social Security disability and I get half of my husbands retirement. I did not file income tax last year,and did not want my x to use me as a dependpendt. If I take photos of these documents how do I send them in.

    • This question is more complex then it appears. The first thing is to get a complementary quote. We are building a new pages please use our search feature above to explain how to see if you qualify, get complementary quotes, calculate subsidy level, when you can enroll outside of Open Enrollment, sign up for complementary experienced agent support, etc.

      Here’s instructions on how to upload documents to your Covered CA account. If you appoint us as your agent, no extra charge, we can do that for you.

      You do need to file taxes. You also need to come up with a number for what you expect 2017 MAGI income to be. Line 37, plus Social Security, tax exempt interest and foreign income.

      Check with competent tax counsel on how you should file your 2016 taxes, being as you were still married. Going forward, married couples are mandated to file a joint return, (publication 974 page 4 section 2 c) if they want subsidies aptc.

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