Alimony Tax Deductions - Alimony Payments You Can Claim

Around fifty percent of marriages end in divorce in the United States. A lot of divorce decrees involve provisions for alimony payments. The IRS takes the position that these kinds of payments constitute a form of income and create an alimony tax deduction for the person making payments as well as a taxable income for the person receiving alimony payments.

All payments made to a divorced or separated spouse are known as alimony.  The amount of alimony payments to be made and who pays for it or receives it is decided by a judge in a court of law. 

As per the IRS, alimony payments are taxable income to the recipient in the year received.  In turn, the individual paying for alimony will be able to claim a deduction for the payments if the following tests are met: 

1.  You and your spouse or former spouse do not file a joint tax return with one another, 

2.  You pay in cash (including checks or money orders), 

3.  The divorce or separation instrument does not say that the payment is not alimony, 

4.  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 are making the alimony payments. 

5.  You have no liability for making any payment (in cash or property) after the death of your spouse or former spouse; and 

6.  Your payment is not treated as child support or property settlement. 

Whether you are receiving or paying alimony, you have to use Form 1040 for your personal taxes.  Irrespective of income levels, deductions or miscellaneous tax issues, you cannot use Form 1040A or Form 1040EZ. 

When preparing your tax return, the person getting alimony payments will report the details on line 11 of Form 1040.  That person must also provide their social security number to their former spouse or be subject to a $50 fine.  The person making alimony payments can claim the deduction on line 34a of Form 1040.