Certain support payments to a separated or former spouse fall under the Internal Revenue Service definition of alimony: qualified payments made under a divorce decree, court order or separation instrument. Alimony is tax deductible for the payer, but not all payments to your ex-spouse are treated as alimony.
Scope of Alimony
To qualify as alimony, the payments to your spouse must be mandatory, not voluntary. They must be in the form of cash, checks or money orders. You and your spouse can't file a joint tax return and can't live in the same household. Alimony payments always end when the spouse receiving the alimony dies. The decree or separation agreement can't say that the payments are something other than alimony. To be deductible, the alimony payments must be received by your spouse or a qualified third party. Payments made under temporary support orders can count as alimony unless both parties agree otherwise, in writing, within the original or a later temporary order.
Certain payments are not alimony and are not deductible, including child support, settlements of noncash property, community income, payments you make to maintain your property and the use of your property by your spouse. If you are compelled to fork over alimony and child support and your total payment is less than the required amount, the payment is first applied as child support and the remainder as alimony. If a separation agreement entitles your spouse to live in property you own, the costs associated with that property -- including mortgage, utilities and insurance -- are not considered alimony, because the property remains yours. You also can't deduct the value you would have received if you could have instead rented out the property.
Alimony can include compulsory payments made to qualified third parties on behalf of your spouse. These include money you spend for your spouse's medical and dental bills, costs -- including property tax and mortgage payments -- related to a home your spouse owns, and life insurance premiums on policies owned by your spouse. If you and your spouse jointly own the home that is subject to the required payments, you can deduct half the total payment as alimony and, in addition, half of the mortgage interest as an itemized deduction.
Claiming the Deduction
You claim alimony payments on IRS Form 1040 as an adjustment to gross income. You do not have to itemize your deductions to deduct alimony payments. You must provide your spouse's Social Security number on the return or be subject to a $50 fine and possible loss of the deduction. If the alimony you pay substantially lowers your taxable income, you can file a new W-4 with your employer to reduce the withholding tax you shell out from each paycheck.
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