Alimony payments can be tax deductible for now

Griffin Law, PLLC
Jan 19, 2018

This blog has on previous occasions discussed how North Carolina residents may be expected to pay spousal support, or alimony, following a divorce or legal separation.

While the paying of alimony is often a bitter pill for people to swallow since it is money going directly to the other parent of that parent’s support and maintenance, as opposed to one’s children, at least at this time, payers can take comfort in the fact that alimony is tax deductible. On the other hand, those receiving alimony also have to report it on their income taxes.

As a word of warning, this is slated to change after December 31 of this year. Under the new tax measure recently passed, alimony will be treated like child support for tax purposes; it will neither be tax deductible nor reported as income on a recipient’s tax return. This new rule will not apply to those who are already paying alimony as of December 31, 2018.

For now, though, alimony payments can be deducted from one’s taxes under the right circumstances. While there are a number of rules in force when it comes to whether the IRS will accept a claimed deduction for alimony, they boil down to two important concepts.

First, in order to get the deduction, the person paying alimony indeed has to be living separately from the person who is receiving it. Moreover, the couple cannot file a joint tax return if one of them wishes to claim an alimony deduction. Either one of these scenarios would defeat the purpose of the deduction.

Moreover, the divorce or separation decree must be crystal clear that the payments being deducted are indeed alimony, that is, a stream of support that will last, at the longest, for the lifetime of the person receiving the payments. Other payments, such as payments for child support or as part of a property division, are not deductible.

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