Before 2019, the payor deducted alimony on a federal tax return and the recipient paid taxes on it. Today, alimony is non-deductible and non-taxable in the manner of child support. However, there are strategies that can be used to minimize taxes while negotiating a settlement. For high net worth couples, these strategies include transferring retirement and taxable assets that will produce the income equivalent to the proposed alimony.
This article provides more details on these and other strategies which should be reviewed with a certified divorce financial analyst.