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What are the federal tax implications for alimony?

Many divorce settlements and court orders will include provisions for spousal support ("alimony") and child support. Aside from questions of how these amounts are to be calculated, and additional consideration must be how each of the spouses must treat alimony sums with regard to federal and Massachusetts tax laws. This post provides a brief introduction to how the Internal Revenue Service considers alimony for federal tax purposes.

The general rule is that the tax consequences for alimony payments depend on whether you are the person paying or receiving spousal support. If you are the person making the payments, you can use Form 1040 or Form 1040NR to deduct those payments from your income, while if you are the person receiving the payments then you need to declare those sums as income.

Note, however, that there are conditions that the IRS imposes on what constitutes a payment of alimony, and rules that determine whether a payment qualifies as alimony. Not all amounts paid from one spouse to another will be considered to be spousal support for tax purposes.

For example, the following are not considered to be alimony by the IRS:

  • Child support (this applies the reverse of the alimony rule, meaning that the payer cannot deduct child support from income and the recipient does not need to declare such sums as income)
  • Noncash property settlements
  • Use of the property of the payer, or amounts spent to maintain the payer's property
  • Payments that are part of the community income of your spouse

Additional considerations exist for expenses for a jointly owned home and certain payments to third parties, such as payments for a spouse's medical expenses, housing costs, taxes and tuition. Even though third parties receive these, they are treated for tax purposes as having been received by the spouse.

This post is meant for informational purposes only. It cannot cover all of the federal tax implications connected with alimony payments, and does not cover Massachusetts state laws on the topic. Accordingly, you should not rely on it as legal advice. If you have questions concerning alimony and taxes, your divorce attorney should be able to provide you with assistance.

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