Requirements for Deductible Alimony Under the Internal Revenue Rules: by Laura Alfano

Requirements for Deductible Alimony Under the Internal Revenue Rules:

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Payment Made Pursuant to a Divorce Decree or Separation Agreement

The divorce decree does not have to be final for payments made to a spouse or former spouse under the decree or separation agreement to be deductible. A payment ordered by an interlocutory decree or pendent lite decree can also qualify.

No Joint Tax Return

The parties can not file a joint tax return with each other.

Not Household Members

The parties must not be members of the same household when the payment is made in order for the payment to be deductible. Living in separate rooms is not enough. The parties must not be living in the same physical home or apartment. However, a one-month grace period exists. If one of the parties is planning to move, and in fact does not move within one month of the payment, it is deductible even though the parties were living together when the payment was made.

Cash Payment

The payment must be made in cash in order for it to be deductible. “Cash” includes checks, money orders, and cashiers checks. Cash paid to a third party at the written request of a spouse might also qualify as alimony under certain conditions.

No Payment After Recipient Dies

There is no obligation to make any payment (in either cash or property) after the death of the recipient. Property division debts, not alimony, survive the death of either party. A person does not need alimony if (s)he dies. If the payor is obligated to make payments after the death of the recipient, none of the payments made either before or after the death of the recipient qualify as alimony.

Payment is not Disguised as Child Support

The payment may not be improperly disguised as child support. The IRS will consider a payment to be child support when the amount of the payment is reduced: on the happening of a contingency relating to the child, or at a time that can be clearly associated with a contingency relating to the child.

Alimony is Not Treated as Nonalimony

The parties may not exercise the option of treating qualifying alimony payments as nonalimony. If the parties do not want the payments to be classified as alimony, a provision can be included in the agreement or the decree to treat the payments as nonalimony.