Alimony and Spousal Support Across the Canada-US Border: Who Deducts It and Who Pays Tax?

Alimony under a US divorce agreement signed after 2018 is invisible to the IRS: the payer can’t deduct it and the recipient doesn’t report it. Canada still runs the older model, where the payer deducts spousal support and the recipient pays tax on it. Put one ex-spouse in each country and both systems land on the same payment, and the Canada-US treaty (Article XVIII, paragraph 6) then decides who taxes what. Most people miss that a Canadian resident receiving post-2018 alimony from a US payer can generally claim it tax-free in Canada under the treaty.

How does the US tax alimony after 2018?

For a divorce or separation instrument executed after December 31, 2018, the payer gets no deduction and the recipient reports no income. The Tax Cuts and Jobs Act repealed IRC 71 (the inclusion rule) and IRC 215 (the deduction) for those instruments, and the effective-date note sets a start date with no end date. An instrument signed on or before December 31, 2018 keeps the old rules, deductible and taxable, unless it’s later modified and the modification says the new rules apply.

• The repeal note under IRC 71 and IRC 215 applies to instruments “executed after Dec. 31, 2018” and to older instruments “modified after Dec. 31, 2018, if the modification expressly provides” that the new rules apply.
• A modification that says nothing about the change leaves the old rules in place. IRS Publication 504 walks through a 2016 decree modified in 2025: with no express statement, every 2025 payment stays deductible to the payer and taxable to the recipient.
• Child support was never deductible or taxable in the US, and IRS Topic 452 adds that when a payer pays less than the full amount, “the payments apply to child support first.”

The line between spousal and child support, and what happens with lump sums and payments to third parties, gets its own treatment in cross-border alimony versus child support.

How does Canada tax spousal support?

Canada kept the deduction-and-inclusion model, and the date of the agreement makes no difference for spousal support. A “support amount” goes into the recipient’s income under ITA 56(1)(b) and comes out of the payer’s income under ITA 60(b). To qualify, the amount has to be a periodic allowance for the recipient’s maintenance, the recipient must have discretion over how it’s spent, the two must be living apart because the relationship broke down, and it must be payable under a court order or written agreement.

• The definition sits in ITA 56.1(4): “an amount payable or receivable as an allowance on a periodic basis for the maintenance of the recipient, children of the recipient or both the recipient and children of the recipient, if the recipient has discretion as to the use of the amount.”
• The recipient’s inclusion is ITA 56(1)(b) and the payer’s deduction is ITA 60(b). Both use the same formula, and both strip out child support first.
• Child support under an order or agreement made after April 1997 is neither deductible nor taxable. CRA’s Folio S1-F3-C3 sets out the 1997 change at paragraph 3.2.
• A single lump sum generally doesn’t qualify as periodic (Folio paragraph 3.44), though arrears of periodic payments paid in one go can.

What happens when the payer is in the US and the recipient is in Canada?

Under a post-2018 agreement the US payer gets no deduction, and the Canadian recipient can generally claim the payments tax-free in Canada under the treaty. Article XVIII(6)(b) exempts from Canadian tax any alimony arising in the US that “would be excluded from taxable income” in the US if the recipient lived there, and post-2018 alimony is excluded for a US resident. Under a pre-2019 agreement the picture flips: the US payer deducts, Canada taxes the recipient, and the treaty keeps the US from withholding on the payment.

• The recipient converts the payments to Canadian dollars and reports them on lines 12799 and 12800, the two lines the CRA’s support payments received page walks through.
• The treaty-exempt amount then comes off on line 25600, which the CRA describes as the line for “foreign income that you included in your income that is non-taxable in Canada because of a tax treaty.”
• CRA’s Folio S1-F3-C3, paragraph 3.66, confirms support from a non-resident payer is included when the conditions are met, and adds that “the taxation of the support payments may be affected by a tax treaty.” The treaty text does the rest.

For a pre-2019 agreement, IRS Publication 515 says alimony paid by a US resident to a nonresident alien is normally subject to 30% withholding, but “many tax treaties, however, provide for an exemption from withholding for alimony payments.” The Canada-US treaty is one of them: Article XVIII(6)(a) makes the alimony taxable only in Canada, so the recipient claims the exemption with the payer and reports the full amount on the Canadian return, with no US tax to credit.

What happens when the payer is in Canada and the recipient is in the US?

The Canadian payer deducts the support under ITA 60(b) if it meets the support-amount definition, and Canada doesn’t withhold tax on support paid to a non-resident. On the US side, a post-2018 agreement means the recipient reports nothing, so the payment is deducted in Canada and taxed nowhere. Under a pre-2019 agreement the US recipient includes it on Schedule 1, and since Canada took no tax, there’s nothing to credit.

• Folio S1-F3-C3, paragraph 3.66: where “the payer is a resident of Canada who makes support payments to a non-resident, payments are deductible if all the conditions of a support amount are met. Tax need not be withheld on the payments.”
• ITA 212(1), the Part XIII withholding list, doesn’t name support amounts, which is why nothing comes off at source.
• The payer claims the deduction on lines 21999 and 22000 and has to register the order or agreement with the CRA on Form T1158 if it includes spousal support.
• A US recipient under a pre-2019 agreement reports the alimony on Schedule 1 (Form 1040), line 2a, per Publication 504. Under a post-2018 agreement there’s nothing to report.

Does the Canada-US treaty change the result?

Yes, in one direction. Article XVIII(6) says alimony “arising in a Contracting State and paid to a resident of the other Contracting State” is taxable only in the recipient’s country, then carves out any amount the source country would exclude from taxable income for its own resident. That carve-out is on the list of provisions the saving clause can’t override, so it protects US citizens too. What the treaty can’t do is hand back a deduction domestic law took away, so a US payer under a post-2018 agreement still deducts nothing.

Who pays, who receives	Agreement signed after 2018	Agreement signed on or before Dec 31, 2018 (not modified to adopt the new rules)
Payer in the US, recipient in Canada	US: no deduction. Canada: reported, then claimed as exempt on line 25600 under Article XVIII(6)(b) (our read). Taxed nowhere on that read.	US: payer deducts, no withholding under Article XVIII(6)(a). Canada: recipient taxed under ITA 56(1)(b).
Payer in Canada, recipient in the US	Canada: payer deducts under ITA 60(b), no withholding. US: recipient reports nothing. Deducted in Canada, taxed nowhere.	Canada: payer deducts, no withholding. US: recipient includes on Schedule 1, line 2a. No foreign tax to credit.
Both in Canada	Canada: deduct and include. US rules only matter if one of them is a US citizen.	Same.
Both in the US	US: no deduction, no inclusion.	US: deduct and include.

• The saving clause, Article XXIX(2), lets each country tax its residents and the US tax its citizens “as if there were no convention,” but paragraph 3(a) lists 6(b) of Article XVIII among the provisions that survive it.
• Nothing in Article XVIII(6) speaks to the payer’s deduction, and the domestic rules on both sides settle that.

What if the recipient is a US citizen living in Canada?

A US citizen in Canada files in both countries, so both sets of rules land on one person. Under a post-2018 agreement the US return is silent whoever pays, and Canada includes the support unless the payer is in the US, in which case we take the Article XVIII(6)(b) exemption, which survives the saving clause, even though the recipient is a US citizen. Under a pre-2019 agreement with a Canadian payer, the US includes the alimony, Canada includes it too, and the Canadian tax on it is creditable on Form 1116.

The foreign tax credit rarely helps in these files because the two taxes usually fall on different people. Where it does matter is the dual filer above, and how Form 1116 handles Canadian tax covers the mechanics.

What should I do next?

Pull the agreement and check the date it was signed (and whether any later modification adopted the post-2018 rules), then check where each of you is tax resident this year. Those two facts place you in one cell of the table above. If you’re the Canadian recipient of post-2018 US alimony, claim the treaty exemption on line 25600 and keep the agreement and proof of the payer’s US residence on file. If you’re negotiating a new agreement, run the after-tax numbers for both people before the support figure is set, because the same dollar amount costs different amounts depending on direction.

• Cross-border alimony versus child support: wording, lump sums and moves, the companion guide on what the agreement has to say
• Cross-border divorce: splitting retirement accounts, the RRSP, 401(k) and IRA side of the same divorce
• Filing jointly with a non-resident Canadian spouse, if the divorce isn’t final and a joint election is in place
• Canada vs US tax rates, the marginal rates behind the after-tax cost
• Currency conversion for cross-border tax, how to convert the payments for each return

Related guides:

• Cross-Border Charitable Donations: Tax Deductions When You Give Across the Canada-US Border

• Cross-Border Alimony and Child Support: Tax When Payments Cross the Canada-US Border

• Canadian Employer Pension (DB/DC) Received in the US: How Is It Taxed?

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.