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How to Ensure Your Alimony Payments are Tax Deductible

How to Ensure Your Alimony Payments are Tax Deductible

Did you know your alimony payments could be tax deductible, so long as you follow certain Internal Revenue Service (IRS) rules? If you pay alimony and abide by these guidelines, you could save a lot of money on your tax bill.

The following are the seven requirements to which you must adhere to deduct your alimony payments from your taxes:

  • Payments should be made in cash or check: If you attempt to make payments via other means, such as giving your spouse your car because its value covers a certain number of alimony payments, it will disqualify you from deducting the money from your taxes.
  • Follow all instructions and designate payments as tax deductible: Your payments should be made in accordance with your divorce decree. All documents should label those payments as deductible by the payer and taxable to the recipient.
  • Do not classify alimony as child support or other costs: Child support payments are not tax deductible, and so they should not be at all tied to child support costs.
  • Include language specifying payments end upon the death of the recipient: Most alimony payers have the right to terminate an alimony agreement if the recipient gets remarried. This information must be included in your agreement for it to be tax deductible.
  • You do not live together: If you are still living with the person to whom you are paying alimony, those payments are not considered tax deductible. There must be a physical separation of the two parties.
  • Do not file tax returns jointly: Doing so disqualifies you from deducting your alimony payments.
  • Do not pay extra on your payments: The IRS has rules in place that guard against front-loading your payments. Stick to the payment schedule as outlined in your agreement and you will likely be able to deduct the payments.

To learn more about alimony and some of the tax-related implications of making these payments, speak with an experienced Nassau County divorce attorney at Bryan L. Salamone & Associates.

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