Deducting Alimony for US Taxes

Alimony is a payment to or for a spouse or former spouse under a divorce or separation instrument.

It doesn’t include voluntary payments that aren’t made under a divorce or separation instrument.

Alimony is deductible by the payer, and the recipient must include it in income.

To be alimony, a payment must meet certain requirements:
1. There are some differences between the requirements that apply to payments under instruments executed after 1984 and to payments under instruments executed before 1985.
2. The general requirements that apply to payments regardless of when the divorce or separation agreement was executed.

How To Deduct Alimony Paid
You can deduct alimony you paid, whether or not you itemize deductions on your return. You must file Form 1040. You can’t use Form 1040A or Form 1040EZ.

How To Report Alimony Received
Report alimony you received as income on Form 1040, line 11, or on Schedule NEC (Form 1040NR), line 12. You can’t use Form 1040A or Form 1040EZ.

Enter the amount of alimony you paid on Form 1040, line 31a. In the space provided on line 31b, enter the recipient’s social security number (SSN) or individual taxpayer identification number (ITIN).

General Rules
The following rules apply to alimony regardless of when the divorce or separation instrument was executed.

Payments not alimony. Not all payments under a divorce or separation instrument are alimony. Alimony doesn’t include:
1. Child support;
2. Noncash property settlements;
3. Payments that are your spouse’s part of community income, as explained under Community Property (call the CPA about this);
4. Payments to keep up the payer’s property; or
5. Use of the payer’s property.

Alimony requirements. A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses don’t file a joint return with each other and all the following requirements are met.
1. The payment is in cash (Only cash payments, including checks and money orders, qualify as alimony)
2. The instrument doesn’t designate the payment as not alimony.
3. The spouses aren’t members of the same household at the time the payments are made. This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance.
4. There is no liability to make any payment (in cash or property) after the death of the recipient spouse.
5. The payment isn’t treated as child support.
(This is a general summary. Contact our office before applying them to your specific circumstances).

This is not tax advice, and is general in nature. Contact our CPA firm for a consultation prior to applying this information to your specific circumstances.

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Ben R Shull CPA LLC provides clients with tax, transaction, and advisory services.  The insights and quality services we deliver help lead our clients through the next generation of changes, and accelerate growth while reducing risk. CPA Katy, TX.