Spousal Support As a Tax Deduction

Only the recipient pays taxes on spousal support.

Only the recipient pays taxes on spousal support.

You get married with the highest of hopes, so it can be a real blow to find out that not only has your marriage failed, but the court expects you to support your spouse post-divorce as well. On the bright side, spousal support following a relatively short-term marriage usually isn't permanent – it's for a set number of years to allow your ex to find a job that pays well enough for her to support herself. You also don't have to pay taxes on the money you give her.

The Tax Deduction

Spousal support – called spousal maintenance or alimony in some states – is a monetary payment made to your ex so she can meet her living expenses. You're not living off the money, she is, so it's not taxable income to you. Your payments come off the first page of your tax return, although you do have to file a Form 1040, not a 1040A, 1040EZ or 1040NR, in order to take the deduction. Enter the total amount you paid on Line 31a of your return to arrive at your adjusted gross income, the amount you would have to pay taxes on if you didn't claim any exemptions or deductions. This is important, because if your employer is withholding taxes from your paychecks based on your overall income, and depending on how much spousal support you're paying, you'll probably end up overpaying the IRS by year's end. You can either ask your boss to adjust your withholding accordingly, or you can take the refund at tax time.

Declaring the Support

Your ex must also claim the support as extra income on her return, and she must pay taxes on it according to her own tax bracket. When you enter the spousal support you've paid on your tax return, Form 1040 asks you for your spouse's Social Security number so the Internal Revenue Service can be sure she reports it as income. If she won't give you her Social Security number, or if you fail to include it on your return, the IRS imposes a $50 penalty.

IRS Rules

As with most tax issues, the IRS has a whole list of rules for deducting alimony. It's not quite as simple as paying your ex, then jotting down the appropriate amount on Line 31a of your return. The support you're paying must be court-ordered – you have to have a divorce decree or separation agreement in place that requires you to pay it. If you're separated but not yet divorced, you can't file a joint married return and you can't still be residing under the same roof. You have to actually give your ex the money; if you pay her mortgage for her or if you pay any other bills to a third party in lieu of spousal support, it's typically not deductible.

Spousal Support, Child Support and Property Settlement

A fine line exists between spousal support, child support and property settlement payments, so the exact language of your decree or separation agreement is important. Child support isn't tax-deductible, nor is it taxable to the spouse who receives it on behalf of the children. If you're paying both, your decree should clearly state how much goes to your children and how much of your payment goes to your ex. If you fall behind and pay less than the full amount, the IRS applies what you did pay to your child support obligation first. You can only deduct any spousal support you paid over the amount of your yearly child support obligation. If you make a payment to your ex for her portion of the equity in your home or other property, it's not spousal support and it's not tax-deductible -- so your decree should also clearly define the nature of any payments you have to make.

 

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