When it comes to alimony…The IRS can be more reasonable than your ex! Here are the rules you must know!

So things didn’t work out so well in your marriage.  It happens more often than we’d like to think.  And now you’re divorced.  Believe it or not, there are tax implications involved in divorce.  In this article we will cover one component of divorce – alimony. 

If you are paying or receiving alimony (also known as spousal support or a maintenance agreement) Section 71 of the IRS Code states that alimony must be included in the recipient’s gross income and can be excluded from the payer’s gross income.  Put simply:

• If you are paying alimony, you may deduct this from your Gross Income.
• If you are receiving alimony, you will need to include this in your Adjustable Gross Income (AGI).

The IRS guidelines for what is considered alimony are as follows:

• The payments must be in cash (check or money order).  Payments cannot be debt, property or services.
• The payments must be provided for in a divorce or written separation agreement.
• It isn’t alimony if you filed a joint tax return with the person who paid you, or received payment from you. 
• It isn’t alimony if you make payments to your spouse while you are members of the same household (separate rooms, wings, floors don’t count – it must be a separate household).

If you have paid alimony to your former spouse, you will need to have his/her social security number in order to deduct this payment from your income.  Your former spouse MUST supply their Social Security Number (SSN) to you in order to claim the deduction.  If they do not, they may be fined by the IRS.

So, how do you claim the payment or receipt?

If you paid alimony, you will report it (along with your former spouse’s name and SSN) on line 31 of your Form 1040.

If you received alimony, you will report it on line 11 of your Form 1040.

Note:  Child Support you pay is never deductible.  Child Support you receive is not taxable. 

For more information about how alimony and divorce in general affects your taxes, get Publication 504, Divorced or Separated Individuals, by clicking here; or contact your local PRO-TAX office.

• More Articles