Can i deduct alimony payments from taxes

Or you can ask a tax professional to help you look at the tax impact of different amounts of support so that you can figure out the optimal amount—that is, the amount that puts the most money in each person's pocket after taxes. The IRS offers many publications that may help you as you negotiate support. Both are available at www. The IRS treats payments made to third parties on your behalf as though you received them—you have to include them in your taxable income.

So, for example, if your former spouse pays the mortgage directly and this is provided for in your marital settlement agreement or court order , you must report that amount as income.

You can deduct spousal support payments on your income tax return, but not child support or property distributions. The IRS scrutinizes support paid in the first three years to make sure that you didn't disguise property distribution or other post-divorce obligations, like attorneys' fees, as deductible support.

If the divorce agreement calls for higher payments in the first post-divorce years and lower payments later, and the IRS believes the early payments are in lieu of property division or other nonsupport items, it can go back and "recapture" retroactive taxes.

When you negotiate your spousal support agreement, it's important to make sure that you don't tie the termination of spousal support to anything related to your kids—for example, the time they leave home or when they finish college.

If you do, the IRS might consider the payments child support rather than spousal support—and child support payments aren't tax-deductible. If you're making payments to a third party instead of to your spouse, but you've agreed in your settlement agreement that the payments constitute spousal support, for tax purposes, the IRS treats those payments as if you sent them directly to the recipient.

In other words, you can deduct them at least in part as support payments. Certain payments are not fully deductible, though, including payments related to a jointly owned home.

If you and your spouse continue to own the home together and you pay all the expenses, you are allowed to deduct only half of the mortgage payment as spousal support. But you can take half of the mortgage interest deduction as well.

If you or the judge finalized your divorce after December 31, , the Tax Cuts and Jobs Act permanently eliminated the deduction benefit and reporting requirements of spousal support. As a result of the new tax law, paying spouses will likely negotiate to pay less in spousal support to make up for the loss of the tax deduction and "windfall" for the recipient not reporting the income. If you're going through a divorce and alimony is an issue, it's important to speak with an experienced family law or tax law attorney before you settle or ask the court to decide the alimony issue for you.

Paying spouses must evaluate the impact of paying spousal support on their annual income and how the payments will impact the recipient.

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Child Custody Child Support. Alimony Divorce and Property. Market Your Law Firm. Lawyer Directory. Call us at 1 The Seven Rules of Alimony and Taxes. Until recently, the IRS allowed paying spouses to deduct alimony payments and required recipients to report it as income. However, the rules have changed for any divorce finalized on or after January 1, Is Alimony Tax Deductible? The Date of Divorce Matters If you finalized your divorce before January 1, , the spouse paying support may report the payments as a tax deduction, and the recipient must report and pay taxes on the alimony as income unless your support agreement or order says otherwise.

The IRS imposes seven requirements on taxpayers seeking to deduct alimony payments: Make payments in cash or by check. You must pay alimony by cash or check for the benefit of a spouse or former spouse. Where Is My Refund? How to Check Refund Status efile. Mailing Addresses Contact eFile.

Sign In Start Now. Join Taxesfaction! More eFiler Reviews. Why Choose eFile. TaxTalk With Tess. It potentially brings tax savings to both parties. To qualify for a tax deduction on alimony, you must adhere to the following rules. You must make alimony payments according to the rules stipulated in your divorce papers. The document could be a separation agreement, marital settlement agreement, divorce judgment, court order, or temporary support order. Ensure your documents indicate the amount you should pay and a clear description of the payment — alimony, spousal maintenance, and spousal support.

The papers must also describe the amount as deductible by the paying spouse. The higher-earning spouse must pay alimony in cash or check to take a tax deduction on the payment. You can only claim a deduction on alimony paid when you are living in different residences. Tying alimony to other responsibilities pertinent to your divorce or separation can declassify your alimony payments as tax-deductible. Similarly, if you combine alimony with the amount you pay in marital property distribution, the full payment becomes non-deductible.

Be sure to understand IRS guidelines against front-loading. The IRS can tax the excess in the third year of separation. Your divorce judgment or marital settlement agreement should specify that alimony payments end when the recipient dies. You may also have the right to stop paying alimony if the recipient gets married. If your alimony is deductible, you can deduct the payments even without itemizing the deductions on your tax return.