Are alimony payments tax deductible?
2020 UPDATE: Since early 2019, newly established alimony obligations are NOT tax deductible. If your alimony obligation used to be tax deductible, it is still tax deductible. The change in the law only applies to alimony obligations created after early 2019. The below transcript still applies to older alimony obligations.
Usually, yes, alimony that you pay is tax deductible and alimony that you receive is taxable to you as income.
In order for the IRS to consider alimony to be tax deductible, a few conditions need to be met:
1. The person paying the alimony must do so in cash or its equivalent – such as a check or money order. Also, the payment must be received by or on behalf of your spouse or former spouse.
2. The persons paying and receiving alimony cannot live together and must file separate tax returns.
3. The right to receive the alimony must terminate upon the death of the person receiving the alimony.
4. The court order establishing the alimony cannot state that the alimony is non-deductible to the person paying the alimony and non-taxable to the person receiving the alimony.
5. The alimony payments must be made pursuant to a court order. An agreement between the parties – without a judge’s signature – is not enough.
6 and lastly, the tax return of the person paying the alimony must include the social security number of the person receiving the alimony. This is so that the IRS can verify that the recipient of the alimony is being taxed on what the person paying is deducting.