Are alimony payments tax deductible?
Now that tax season is upon us, Springfield-area residents who have recently been divorced may be wondering about the tax consequences of their marital dissolution. In this week’s post, we’ll look at the tax treatment of alimony payments. Alimony, also referred to as spousal support, refers to payments made by one former spouse to help the other recover financially after a divorce.
For the paying spouse, alimony payments are deductible, as long as the payor and the former spouse do not file a joint return for the year in question. The flip side of deductibility for the paying spouse is that alimony is considered taxable income for the recipient spouse. The payments must be reported on Line 11 of Form 1040.
Not all payments made by one former spouse to the other are considered alimony. A taxpayer should take care to ensure that payments for which they are claiming a tax deduction are in fact alimony and not, for example, child support or payments made in connection with the divorce property division. Child support is never tax deductible, and property division payments do not qualify as alimony, even if they are made in installments after the divorce is final. If the divorce decree says the payments are not alimony, they are not deductible as alimony.
Because alimony is deductible by the payor and taxable to the recipient, both former spouses should keep accurate records of payments made or received. It is a good idea to keep a list of all payments for each tax year, as well as copies of checks and money orders, or receipts for payments made in cash. These records should be kept for at least three years in case of an IRS audit. It is a good idea to keep the records for longer than that, however, in case a recipient spouse claims a payments was never made, or a payor spouse claims the recipient received more than they really did.
Source: Findlaw.com, “Alimony and Taxes,” accessed March 5, 2017