Spousal support, also known in many jurisdictions as alimony, refers to court-ordered financial payments that are made by one spouse, who is known as the obligor or payer, to the other spouse, known as the obligee or payee/recipient. Spousal support is ordered as a result of a legal separation or divorce.
In general, spousal support is ordered when a judge determines during the divorce or separation proceedings that it is just and fair for one spouse to continue to financially support the other. It is important to note that alimony is not required in every case and is typically only required when there is an unjust balance of finances between one spouse and the other.
Importantly, the amount of spousal that is ordered to be paid by the payer is typically determined by several factors, which will differ based on the state laws in the state in which the spousal support is requested. Spousal support payments are typically made in regular installments and in accordance with a predetermined schedule.
Certain spousal support or separate maintenance payments will have tax implications. This means that certain forms of spousal support will be deductible by the payer spouse, with the recipient spouse reporting the payments received as income. In general, this applies to spousal support or maintenance payments that meet the tax requirements for being considered taxable alimony or separate maintenance.
This means that there are some forms of spousal support that are not considered to be taxable. These forms of spousal support will be discussed further below. Further, the laws concerning the tax implications of spousal support changed in 2018. Starting in the year 2019, spousal support or separate maintenance payments that were made under a divorce or separation agreement executed after 2018 were not deductible by the payer spouse.
This means that if there was a divorce decree order, a separate maintenance decree, or a written separation agreement that was executed after January 1, 2019 or executed before January 1, 2019 with a modification that expressly states the repeal of the deduction for alimony payments, then such spousal support payments are:
- Not deductible by the payer spouse for federal tax purposes; and
- Not included in the gross income for the recipient spouse for federal tax purposes.
This means that if you were obligated to pay spousal support or maintenance payments in 2024, then you would not be eligible to deduct such payments on your tax return, as the agreement was executed after January 1, 2019. Likewise, the spouse that receives the spousal support or maintenance has no requirement to report the payments received as income on their tax return. However, the spouse obligated to make payments may still get to deduct such payments on their state income tax return.
What Is Considered Alimony or Separate Maintenance?
As mentioned above, alimony or separate maintenance payments can have different tax implications based on the specifics of each individual’s situation. This is because not all payments under a divorce or separation agreement are considered to be alimony or separate maintenance.
According to the Internal Revenue Service (“IRS”), a payment is considered alimony or separate maintenance for federal tax purposes if all of the following requirements are met:
- The spouses don’t file a joint return with each other;
- The payment is in cash (including checks or money orders);
- The payment is to or for a spouse or a former spouse made under a divorce or separation instrument;
- The spouses aren’t members of the same household when the payment is made (This requirement applies only if the spouses are legally separated under a decree of divorce or of separate maintenance.);
- There’s no liability to make the payment (in cash or property) after the death of the recipient spouse;
- The payment isn’t treated as child support or a property settlement; and
- The divorce or separation agreement does not designate the payment as not includible in gross income of the payee spouse and not allowable as a deduction to the payer spouse.
This means that the following payments under a divorce or separation agreement are not considered to be spousal support for federal tax purposes:
- Child support payments;
- Noncash property settlements, whether in a lump-sum or installments;
- Payments that are one spouse’s part of community property income;
- Payments to keep up the payer’s property;
- Use of the payer’s property; or
- Voluntary payments (i.e. payments that are made outside a divorce or separation agreement).
How to Report Taxable Alimony or Separate Maintenance?
According to the IRS, If an individual makes payment amounts that fulfill the above requirements and are considered taxable alimony or separate maintenance, they may deduct such payments from their income regardless of whether or not they itemize their deductions.
The paying spouse must also enter the social security number (“SSN”) or individual taxpayer identification number (“ITIN”) of their spouse or former spouse receiving the payments or their deduction may be disallowed and they may have to pay a $50 penalty.
Importantly, the IRS provides different forms for individuals that qualify for spousal support deductions on their website for federal tax purposes. Additionally, states will provide the forms necessary for state deductions, if applicable.
Likewise if a spouse received payments that are considered taxable alimony or separate maintenance, they must include the amount of alimony or separate maintenance they received as income. They must also provide the social security number or individual taxpayer identification number of the spouse that made the payments or risk a $50 penalty.
What Are the Tax Regulations Regarding Spousal Support Payments?
As mentioned earlier, if you are the individual required to make spousal support payments, then you are generally authorized to claim them as a deduction. However, you can only take a deduction for payments that are mandatory under a divorce decree or property settlement agreement.
This means that you are not allowed to take a deduction for any voluntary payments. As such, it is important for any agreement for spousal support to be in writing so that you have evidence of the structure of spousal support payments and evidence of payments that are to be made. Likewise, you should always keep a receipt for any spousal support or maintenance payments that you made for tax purposes.
Individuals required to pay spousal support may also choose to take the standard deduction, rather than deduct for spousal support or maintenance paid. Regardless of the deduction chosen, individuals paying spousal support must provide the SSN of the recipient on their federal income tax return. The same reporting is required for recipients on their tax return.
What Are Other Examples of Payments Not Considered to Be Spousal Support for Tax Purposes?
As mentioned above, there are numerous payments that may be included in a property settlement or divorce agreement that may be used to provide for an ex-spouse, but not considered to be spousal support for tax purposes.
For example, if an ex-spouse lives rent-free in a home owned by the other spouse, and that spouse is obligated or required to pay for the mortgage, taxes, utilities, and repairs on the home, then those payments are not considered to be spousal support payments.
Further, payments for child support are never deductible and aren’t considered income. It is important to also note that if a divorce or separation agreement provides for alimony and child support, and the payer spouse pays less than the total required, the payments that were made will apply to child support first. Then, only the remaining amount will be considered spousal support for tax purposes.
Do I Need a Lawyer for Help With Spousal Support Tax Implications?
As can be seen, the laws concerning spousal support tax implications can become complicated depending on each individual’s situation. As such, if you are under an order to provide for spousal support or maintenance, or if you are the recipient of such payments, and you have any questions concerning the federal and state tax implications of those payments, it is recommended that you consult an experienced lawyer.
An experienced spousal support lawyer will be familiar with both federal and state tax laws concerning spousal support, and will be able to help guide you in properly reporting spousal support payments and avoid liability. Finally, an attorney may also help you modify older agreements to avoid many tax implications.
