Alimony and the IRS

Alimony, or spousal support payments, is taxable income for the recipient and is a tax deduction for the payer.

You must report alimony you received on Form 1040 Line 11 on the federal tax return, and alimony paid is reported on Form 1040, Line 31. You must report the full amount of alimony or separate maintenance you received during the year. Do not report any amounts received for child support, because child support is non-taxable income. Your ex-spouse must report alimony paid along with your Social Security Number to the Internal Revenue Service, or IRS. Payment of taxes on alimony is a serious business.

If you fail to report alimony on your tax return, that will very likely result in an IRS audit. Since alimony paid is a tax deduction for the person paying you the alimony, it is highly probable that the IRS will find out how much alimony you received, and audit your tax return. The IRS says, “If you are the spouse or former spouse who is receiving the alimony, you must report the full amount as income on line 11 of Form 1040. If you do not give your social security number to your spouse or former spouse who is making the alimony payments, you may have to pay a $50 penalty.”

Federal law states alimony is tax deductible as long as you meet the following six requirements:

• You and your spouse or former spouse do not file a joint return with each other,
• You pay in cash (including checks or money orders),
• The divorce or separation instrument does not say that the payment is not alimony,
• If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment,
• You have no liability to make any payment (in cash or property) after the death of your spouse or former spouse; and
• Your payment is not treated as child support.

According to IRS guidelines, amounts paid under divorce or separate maintenance decrees or written separation agreements entered into between you and your spouse or former spouse will be considered alimony and taxable if:

• You and your spouse or former spouse do not file a joint return with each other
• You pay in cash (including checks or money orders)
• The payment is received by (or on behalf of) your spouse or former spouse
• The divorce or separate maintenance decree or written separation agreement does not say that the payment is not alimony
• If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment
• You have no liability to make the payment (in cash or property) after the death of your spouse or former spouse, and
• Your payment is not treated as child support or a property settlement

Not all payments under a divorce or separation instrument are alimony. Alimony does not include:

• Child support
• Noncash property settlements
• Payments that are your spouse’s part of community property income
• Payments to keep up the payer’s property, or
• Use of the payer’s property

The IRS allows that you may deduct from your income the amount of alimony or separate maintenance you paid, but you must include in income the amount of alimony or separate maintenance you received. Child support is never deductible. If your decree of divorce or separate maintenance provides for alimony and child support – and you pay less than the total required – the payments apply first to child support. Any remaining amount is considered alimony.