How Alimony Is Taxed in New Jersey

Alimony payments in New Jersey are taxable income to the person receiving them and tax-deductible to the person paying them — but only if the agreement or court order meets specific requirements.

New Jersey follows federal tax law on alimony. The person receiving alimony must report it as income on their federal tax return. The person paying alimony can deduct those payments from their taxable income. This applies whether the alimony comes from a divorce decree, a legal separation agreement, or a court order.

The tax treatment depends on when the agreement was signed. Agreements signed before January 1, 2019 follow the older rules. Agreements signed on or after January 1, 2019 follow newer rules that changed how alimony is taxed at the federal level. New Jersey state taxes follow the same cutoff date.

Key Takeaways

• Alimony received before 2019 is taxable income to the recipient and deductible by the payer under both federal and New Jersey state tax law.
• Alimony in agreements signed after December 31, 2018 is not taxable to the recipient and not deductible by the payer under federal law, though New Jersey state treatment may differ.
• The agreement or court order must state that payments are alimony (or spousal support) for the tax rules to explore — payments called "family support" or "property division" are treated differently.
• Child support is never taxable to the recipient and never deductible by the payer, regardless of when the agreement was signed.
• You report alimony received on your federal Form 1040 and on your New Jersey state return if you file one.

Alimony agreements signed before 2019

If your divorce or separation agreement was signed before January 1, 2019, the older tax rules explore. Alimony payments are taxable income to the person receiving them. The person paying alimony can deduct those payments on their federal tax return, which lowers their taxable income.

New Jersey state income tax follows the same rule. If you receive alimony under a pre-2019 agreement, you report it as income on your New Jersey state return. If you pay alimony, you can deduct it on your state return.

This applies only to payments called "alimony" or "spousal support" in the agreement or court order. Payments labeled as "family support," "property settlement," or "child support" do not may have access to for this tax treatment, even if they are paid to an ex-spouse.

Alimony agreements signed in 2019 or later

The federal tax law changed on January 1, 2019. Any alimony agreement or court order signed on or after that date is subject to new rules: alimony is no longer taxable income to the recipient, and the payer can no longer deduct it.

New Jersey state tax law changed on the same date. Alimony in post-2018 agreements is not taxable under New Jersey state income tax either. This means the person receiving alimony does not report it on their state return, and the person paying it cannot deduct it.

This change applies only to new agreements. If you modified an existing pre-2019 agreement after January 1, 2019, the tax treatment depends on whether the modification was substantial. A minor change (such as adjusting the payment amount slightly) usually keeps the old tax rules in place. A substantial modification (such as extending the term or changing the payment schedule significantly) may trigger the new rules. A tax professional or family law attorney can tell you which applies to your situation.

How to report alimony on your tax return

If you receive alimony under a pre-2019 agreement, you report it on your federal Form 1040 (U.S. Individual Income Tax Return). On the 2023 form, alimony goes on line 2a. You must also include your ex-spouse's Social Security number or tax identification number on the return — the IRS uses this to match the deduction on their return with the income on yours.

On your New Jersey state return (Form NJ-1040 or NJ-1040-SR), alimony received is reported as income. The exact line depends on which form you file, but the instructions will direct you to the correct location.

If you pay alimony under a pre-2019 agreement, you deduct it on your federal Form 1040 on line 2b. You must also provide your ex-spouse's Social Security number or tax identification number. On your New Jersey return, alimony paid is deducted in the same way.

If your agreement was signed in 2019 or later, you do not report alimony on either return. The person receiving it does not claim it as income, and the person paying it does not claim a deduction.

The difference between alimony and child support

Child support is never taxable, regardless of when the agreement was signed or what the agreement says. The person receiving child support does not report it as income. The person paying child support cannot deduct it. This rule is the same under federal law and New Jersey state law.

Some agreements include "family support," which is a single payment that covers both alimony and child support. The tax treatment of family support depends on how much of it is designated for child support. If the agreement states that a portion is child support and a portion is alimony, only the alimony portion is taxable (if the agreement was signed before 2019). If the agreement does not break down the amounts, the IRS and New Jersey may treat the entire payment as alimony or may require you to prove how much was intended for child support.

What happens if the agreement does not specify the tax treatment

If your agreement or court order does not clearly state whether payments are alimony, child support, or family support, the IRS and New Jersey will look at the facts of the case to determine the tax treatment. Courts generally consider whether payments end when the recipient remarries or reaches a certain age (a sign of alimony), whether they are tied to the needs of a child (a sign of child support), and what the parties intended.

If there is disagreement about the tax treatment, you may need to file an amended return or work with the IRS or New Jersey Division of Taxation to resolve it. A tax professional or family law attorney can help you understand how your specific agreement is likely to be treated.

Frequently Asked Questions

Do I have to report alimony if I receive it in cash?

Yes. The tax rules explore whether alimony is paid by check, bank transfer, cash, or any other method. You are required to report it on your tax return if it qualifies as alimony under the agreement or court order. The IRS and New Jersey expect you to report all income, including alimony, regardless of how it is paid.

What if my ex-spouse and I agree not to report the alimony for taxes?

You cannot agree to ignore the tax rules. Both of you are required to follow the law. If one of you reports alimony and the other does not, the IRS or New Jersey will notice the mismatch and may audit both returns. It is better to report it correctly from the start.

Can I change the tax treatment of alimony by modifying the agreement?

You can modify an agreement, but the tax treatment change depends on whether the modification is substantial. A minor change usually keeps the old tax rules. A substantial modification may trigger new rules. If you want to change the tax treatment, consult a family law attorney or tax professional first — they can tell you whether a modification will accomplish what you want.

Is alimony taxable if I am not a New Jersey resident?

Federal tax law applies to all U.S. residents and citizens, regardless of state. If you receive alimony under a pre-2019 agreement, it is taxable on your federal return. You may also owe New Jersey state income tax if you earned income in New Jersey or lived there during the tax year, even if you moved away. Check New Jersey's residency rules or consult a tax professional.

What if my agreement was signed before 2019 but we are still modifying it?

The year the agreement was originally signed usually determines the tax treatment, even if you modify it later. However, a substantial modification can change the tax rules. For example, if you significantly extend the term or restructure the payments, the modification may be treated as a new agreement subject to post-2018 rules. Discuss this with a family law attorney before making changes.