Navigating divorce or separation is challenging enough — understanding the IRS marital agreement tax rules shouldn’t add to the stress. At Hobson & Hobson, P.C., we leverage over 30 years of combined experience and advanced technology to guide Atlanta-area families through the intricate intersection of marital agreements and tax law. Here’s what you need to know to protect your finances and make informed decisions.
How IRS Marital Agreement Tax Rules Affect Georgia Families
The Impact of the Tax Cuts and Jobs Act (TCJA) on Alimony
One of the most significant changes in recent years is how the IRS treats alimony for tax purposes. For divorce agreements finalized on or after January 1, 2019, the TCJA permanently altered the landscape:
- Alimony payments are no longer tax-deductible for the payer.
- Recipients of alimony do not report these payments as taxable income.
This shift means the paying spouse bears the full financial burden, with no tax offset, while the recipient receives alimony tax-free. This change is crucial for anyone negotiating a marital separation agreement (MSA) or considering divorce in Georgia.
“Since the TCJA, it’s critical for clients to understand that alimony is no longer a tax deduction. We work closely with tax advisors to ensure our clients aren’t caught off guard by the new rules and that their agreements reflect the current law.” — Georgia Family Law Attorney
Property Division: IRS and Georgia Law
Georgia follows an equitable distribution model, dividing marital assets and debts fairly, though not always equally. The IRS generally treats property transfers between spouses incident to divorce as non-taxable events. However, the tax basis in the property carries over, meaning future sales could trigger capital gains taxes.
Key considerations:
- Transfers are tax-free at the time of divorce.
- The recipient inherits the original tax basis, which can impact future tax liability.
- All marital property, including retirement accounts and real estate, should be addressed in the agreement to avoid disputes and unexpected tax bills.
Child Support and Taxes
Child support is straightforward under both federal and Georgia law:
- Not tax-deductible for the payer.
- Not taxable income for the recipient.
This clarity helps families plan without worrying about IRS surprises.
Drafting Marital Agreements: Best Practices
At Hobson & Hobson, we emphasize the importance of clear, comprehensive marital agreements. Here’s how we help clients avoid common pitfalls:
1. Clarity on Tax Consequences
Every agreement should explicitly state the tax treatment of alimony, property transfers, and any other payments. This avoids confusion and ensures compliance with IRS marital agreement tax rules.
2. Address All Assets and Debts
Include all marital property, retirement accounts, and debts. Overlooking assets can lead to future litigation and tax complications.
3. Plan for Future Tax Events
Consider potential capital gains taxes on property sales and the impact of changing tax rates. Our attorneys often collaborate with tax professionals to minimize liabilities.
4. Update Agreements to Reflect Current Law
Using outdated templates that assume alimony is deductible can create confusion and IRS issues. We ensure every agreement is up-to-date and enforceable.
5. Avoid Ambiguous Language
Vague terms can lead to enforcement problems and additional litigation. We draft agreements with precision and clarity, reducing the risk of future disputes.
Georgia-Specific Considerations
- Equitable Distribution: Georgia courts consider factors like length of marriage, each spouse’s income, and contributions to the family when dividing assets (Georgia Code Title 19).
- Local Requirements: Requirements for marital separation agreements can vary by county. We ensure compliance with all local rules and court procedures.
- Recent State Tax Changes: Georgia reduced its individual and corporate income tax rates from 5.39% to 5.19% for 2025 (Georgia Department of Revenue), which may affect overall tax liability but does not change federal rules on alimony or property division.
How Our Attorneys Help
Our client-centric approach means we’re with you every step of the way:
- Expert Guidance: We ensure your agreements comply with both IRS rules and Georgia law.
- Negotiation and Drafting: We negotiate fair terms and draft clear, enforceable agreements.
- Tax Planning: We collaborate with tax professionals to minimize liabilities and avoid pitfalls.
- Court Representation: If disputes arise, we advocate for your interests in court.
Our commitment to innovation means we use advanced technology to streamline the process, ensuring efficiency and transparency for every client.
Recent Trends and Insights
With the loss of the alimony deduction, more clients are seeking creative solutions in property division and support arrangements. For example, some couples negotiate lump-sum property settlements or structured payments to offset the tax impact. Our attorneys stay current with evolving law and IRS guidance to provide the most effective strategies.
Summary Table: Key Tax Treatments (Post-2019)
Issue | Payer Tax Treatment | Recipient Tax Treatment |
|---|---|---|
Alimony | Not deductible | Not taxable |
Child Support | Not deductible | Not taxable |
Property Transfers | Not taxable (if incident to divorce) | Not taxable (basis carries over) |
Frequently Asked Questions
Are marital separation agreements required in Georgia?
No, but they are highly recommended for clarity and enforceability. A well-drafted agreement can prevent future disputes and ensure compliance with both state and federal law.
How does the IRS treat property transfers in divorce?
Transfers between spouses incident to divorce are generally non-taxable. However, the recipient inherits the original tax basis, which can affect future capital gains taxes.
Can alimony still be deducted on my taxes?
Not for agreements finalized after January 1, 2019. The TCJA eliminated the deduction for alimony payments and recipients no longer report alimony as income.
Is child support taxable?
No. Child support is not deductible for the payer and not taxable for the recipient under both federal and Georgia law.
What happens if my agreement uses outdated tax rules?
Using outdated templates can create confusion and IRS issues. It’s essential to work with a knowledgeable family law attorney to ensure your agreement reflects current law.
Additional Resources
- IRS: Tax Information for Divorce
- Georgia Department of Revenue
- Georgia Code Title 19 – Domestic Relations
- Tax Cuts and Jobs Act Summary
- Hobson & Hobson, P.C.
At Hobson & Hobson, P.C., we combine deep legal expertise with innovative solutions to help Atlanta-area families navigate the complexities of IRS marital agreement tax rules. Whether you’re facing a high-asset divorce, a contentious custody dispute, or simply want to ensure your financial future is secure, our team is here to provide clarity, support, and results. Schedule an initial consultation to discuss your unique situation and take the first step toward a confident, informed resolution.
Attorney Sarah Hobson at Hobson and Hobson, P.C. are powerful advocates for those who fight for better futures for those going through divorce and custody law matters.
