How to Deduct Alimony Payments

Alimony payments are deductible as an adjustment to gross income. This lowers your taxable income and reduces your taxes.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• IRS Forms
• Financial Statements
• Financial Calculator
• Paper And Pencils
• Computers
• Tax Preparation Software

1. Verify that you are not filing a joint return with the recipient of the alimony.
2. Make sure you are not maintaining a joint household with the recipient of the alimony.
3. Include only payments of money, such as cash, checks or money orders. Property or goods do not count. Monies paid to a third party on behalf of the recipient are included as alimony.
4. Exclude payments that are considered child support. The IRS is on the lookout for child support disguised as alimony.
5. Exclude payments either for the use of property or for the maintenance of property in which you have any ownership.
6. Calculate all the money payments that are legitimately alimony and write the total on the line for alimony in the adjustments section of your 1040 form.

Tips & Warnings

• Avoid anything connecting your alimony payments to a child. A payment is considered child support if it is in any way contingent upon the age or circumstances of a child.
• If you and your spouse are not legally separated, a payment under a written separation agreement can be considered alimony even if you are still members of the same household.
• You can claim one-half of mortgage payments on a jointly owned home as alimony if you pay all the mortgage payments. The same applies to real estate taxes and insurance, but only if you are tenants in common, not tenants by the entirety or joint tenants. Talk to an expert about the difference.
• If your divorce or separation decree was executed before 1985, you can claim property transfers as alimony payments - but you probably already know that by now.
• Alimony can never continue after the recipient's death. Doing so, or saying you will do so, will transform all your payments into child support.
• When you are obligated to pay both child support and alimony, you are not considered to be paying any alimony until all child support is paid. You cannot claim an alimony deduction if you owe child support.