Alimony payments, sometimes referred to as “spousal maintenance,” are tax-deductible for the alimony payer and taxable income for the alimony recipient. The IRS has requirements for reporting alimony and charges penalties against those who do not report it correctly. Here is what you should know about taxes and alimony:
What Are Alimony Payments?
The IRS considers money that is paid after a separation or divorce – as indicated in the divorce agreement or written separation agreement – to be alimony if the following conditions are met:
- You do not file a joint return with your spouse or ex-spouse
- You pay with cash, check or money order
- The divorce decree or separation agreement does not specifically state that the payment is neither alimony nor spousal maintenance
- You do not live in the same household as your spouse or ex-spouse while the payments are made
- The payment is not a for a property settlement
- The payment is not for child support.
What Alimony Payments Are NOT
Not all money that exchanges hands after a separation or divorce can be classified as alimony. Money that is paid in the form of child support is not considered alimony, nor is money paid to maintain property that is partially owned by the spouse or ex-spouse who is making the payment. If you voluntarily pay your spouse or ex-spouse money after the separation – money that is not required through a divorce decree or separation agreement – then those payments are not considered alimony and are therefore not tax-deductible by the payer.
Alimony Payment Tax Deductions
If you make alimony payments to a spouse or ex-spouse, you are allowed to deduct the amount paid from your taxable income. You are not required to itemize your deductions in order to take the alimony payment deduction.
To take the deduction, you must file Form 1040 and report the alimony paid on Line 31. You will need to include your spouse or ex-spouse’s social security number on Line 31b and the amount of alimony that you paid on line 31a. Any falsified, incorrect or missing information may result in a $50 penalty and you being denied the alimony deduction.
If you pay your spouse or ex-spouse child support in addition to alimony, you cannot deduct the amount paid for alimony as child support. If you are paying less than the total required for child support and alimony, the money is first applied as child support, and anything remaining is considered alimony for tax purposes.
Reporting Alimony Payments Received
If you receive money from a spouse or ex-spouse as alimony, you must report the amount as income on Form 1040 (Line 11) or Form 1040NR. If you fail to provide your social security to the person making these alimony payments, you may be required to pay a $50 penalty.
If you do not report the alimony that you have received, you will likely be audited by the IRS, especially if your spouse or ex-spouse reports the alimony payment(s) on his or her income tax filing.