Tax Help - There's More To Alimony Than You Think

Alimony is deductible by the payer and reportable as income to the recipient. But it can also provide more deductions for the payer.

For instance, under the terms of a divorce, a taxpayer is required to make the payments on his former spouse’s car, health insurance premiums, and the mortgage and property taxes on their jointly owned home. The former spouse resides in the home. Do you think any of these payments qualify as deductible alimony payments?

Most definitely, yes. The payments he makes for the care and the health insurance premiums qualify as deductible alimony, even if they are paid directly to the bank and the insurance company.

One-half of the interest on the mortgage payments he makes for the joinly owned home qualifies as alimony; the other half is deductible on his Schedule A.

None of the real estate taxes he pays is deductible as alimony; however the entire amount is deductible on his Schedule A.

Additional reading material:

Frequently Asked Questions - Alimony

Tax Topic - Topic 452 Alimony Paid

Tax Topic - Topic 406 Alimony Received

Tax Debt Help - Alimony and Your 1040

You ladies and sometimes men also, who are recipients of alimony should realize that this is reportable and taxable. It is taxable income for the recipient and is a tax deduction for the payer.

Alimony received is reported on Form 1040 Line 11.

Alimony paid is reported on Form 1040, Line 31. Alimony Received

You must report the full amount of the alimony received or separate maintenance you received during for the tax year.

Please remember that alimony and child support are completely different items. Child support is not reportable or taxable for either the payer or receiver.

Your ex-spouse must report the amount of alimony paid along with your full name and Social Security Number to the IRS.

Failure to Report Alimony

The question is, “What if I don’t report my alimony?”. Well, simply put, failing to report alimony on your tax return will 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.

According to the IRS, "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."

Alimony Paid

If you paid alimony or separate maintenance to your ex-spouse, report the total amount of alimony you paid during the year on Form 1040 Line 31. Do not include any child support payments in this figure. You must report your ex-spouse's full name and Social Security Number on Line 31b, and the amount of alimony on line 31a. 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.

For further information on the filing requirements of Alimony, check out IRS Tax Topic 452, Alimony Paid

S. Raines, Sr. Financial Advisor/Tax Preparer