Alimony, or spousal support/maintenance, are payments that you make to your ex-spouse. The court will consider the facts of your case to determine a fair amount and payment schedule to ensure your ex-spouse is not left impoverished. Alimony is deducted from the income you earn. Therefore, the question becomes, who pays taxes on your alimony payments? Do you get to deduct them from your taxes? Does your spouse pay the taxes?
The short answer is yes, you may deduct alimony or spousal support payments from your taxes. Your spouse bears the burden of paying taxes on this money because it is really their income. However, the first caveat is that you must be compelled to make these payments under a separation instrument or divorce decree. This means that you cannot deduct these payments from your income until the payment schedule has been formalized by the court.
Additionally you must also comply with the following five factors:
- If divorced or separated, you and your ex-spouse cannot live in the same household.
- Under the divorce decree, the payment is not alimony.
- You pay the alimony in cash or with a cash-like instrument such as a money order or check.
- You will not be forced to make any payment in cash or property if your ex-spouse is deceased.
- You and your spouse/ex-spouse do not file joint returns.
These factors might seem complicated. However, most of these requirements should be handled by your divorce agreement. But, if you want to make sure that you are complying with all alimony and taxation requirements, you may wish to contact an experienced divorce attorney.
You do not want to get dragged into another costly court battle for an issue you could avoid with some due diligence. Know that your attorney knows the answer or knows someone who knows the answer.
Unfortunately, the headache from a divorce does not end with "signing the papers." Protect yourself and your family and make sure you make the right decisions to secure your financial stability.