Spousal Support Deductions
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What Are Spousal Support Deductions?
Spousal support, also known as “alimony,” are payments made from one ex-spouse (the “payor”) to the other (the “payee”) after divorce or separation. Spousal support payments are subject to various tax rules and restrictions.
Generally speaking, the payor of spousal support can obtain certain deductions by declaring the payments in a tax return. The payee will have to report the support payments as gross income on their tax forms. This is different from other types of support like child support, which is considered non-taxable income.
Can Spousal Support or Alimony Paid Be Considered for Tax Purposes?
Amounts that are made in part of a spousal support agreement between spouses that are considered alimony can be considered for federal tax purposes if:
- Payments are not made for child support
- Payments are not made as a part of a property settlement
- You made the payments in cash or check
- The payments are made to and received by your former spouse
What Is Not Considered Spousal Support or Alimony for Tax Purposes?
Not every payments made to a former spouse is considered alimony or spousal support. For this reason these payments cannot be considered as deductions for federal tax purposes. Alimony or spousal support does not include:
- Child Support payments
- Property settlements or division of property
- Payments made voluntarily by a spouse
- Community property payments
- Payments made to keep up with community property mortgage or debt
What Are the Qualifications for Spousal Support Deductions?
Spousal support payments are tax deductible when the following general requirements are met:
- The alimony payments are made in check, cash, or money order
- The parties do not file a joint income tax return
- The payments are not classified as permanent alimony
- The spouses, if legally separated, are not living together during the time the payments are made
Also, the payor and payee need to exchange social security numbers (SSN), as they will be required to state these on the tax returns. The IRS imposes a fine of $50 on the payor or payee if they don’t list the other party’s social security number on the return. Failure to provide the SSN usually won’t result in the deduction being denied, but the fine will be imposed.
Tax deductions for spousal support begin to get more complicated if real property is at issue between the parties. For example, deductions aren’t usually available if payments are made by the payor for the purpose of settling property debt. This is also true if the payor is making payments on property that they own solely, but the ex-spouse is living in the property. In such cases, the payor may be subject to complex “alimony recapture laws.” However, jointly owned property may be subject to partial deductions depending on the jurisdiction.
What If the Alimony Recipient Doesn’t Declare the Payments?
For the recipient of alimony, failing to declare alimony payments on a tax return can result in serious consequences. At the very least, they will likely be subject to an IRS audit, since the payor may be doing their part in declaring the payments. Serious discrepancies can even result in criminal charges like tax fraud, which is punishable by fines and possible jail time.
The payor can face serious legal consequences for falsifying information in attempts to qualify for a deduction. If both the payor and payee have collaborated in deceiving tax authorities, this may make the legal consequences more severe.
Do I Need a Lawyer for Issues with Spousal Support Deductions?
Spousal support deductions can sometimes be very complicated. If you need assistance with spousal support or if you have any legal questions, you may wish to contact a family lawyer in your area. A qualified attorney can help ensure that you are meeting all the requirements of state and federal laws. Also, an attorney can help you in the event that you need to file a lawsuit or if you need to appear in court.
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Last Modified: 04-08-2015 02:24 PM PDT
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