Tax Information on Alimony

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Alimony or spousal support is an amount of money determined by a judge, which will be paid from one spouse to another in the event of separation or divorce.  The payment amount and information is entirely dependant upon the situation and the judge who oversees the case.  However, there is some important tax information on alimony that those who pay it and those who receive it should understand.

Alimony is Tax Deductible

Unlike child support, which is neither tax deductible to the person who pays it or included in taxable income of the person who receives it – alimony is tax deductible.  Therefore, a spouse who makes a large amount of money may actually benefit from paying alimony to an ex spouse.

The spouse who receives the alimony payments must report the full amount within the taxable income, which also means that he or she must pay taxes on the alimony payments.

Voluntary Alimony

Voluntary alimony is still tax deductible, as long as it is documented by the court.  If a spouse pays his or her ex partner payments each month which are not documented by the court, the money is not tax deductible.  Therefore, it is beneficial to receive a court order to pay alimony if an individual plans on offering spousal support anyway.

Requirements for Tax Deductible Alimony

In order for alimony to be tax deductible, it must meet certain criteria.  The alimony payments must be made in cash, check or money order.  It will not be tax deductible if the payments are made with:

  • Goods – such as household items, groceries, clothing, etc.
  • Property – such as land, vehicles, boats, etc.
  • Services – such as home repairs, childcare, lawn care or other services.

Spouses are also not able to claim alimony as a tax deduction during a year when the couple filed jointly or lived together under the same roof.  In order for one spouse to claim the alimony as a tax deduction, the taxes must be filed separately and the couple must have lived separately under different roofs. 

Because the benefits of alimony are better than the tax benefits of child support, many individuals have tried to label child support payments as alimony payments on tax documents.  The government is wise to this trick, however, and the taxpayer will be penalized if it is suspected that an individual has mislabeled his or her payments on tax documents.  While there are a lot of different variables which figure into taxes and alimony, the above information is the most basic. 

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