Barbara J. Katzenberg, Attorney at Law
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Is all alimony tax deductible?

Quite a few Massachusetts residents currently pay spousal support to their exes, and many more will in the years to come. Right now there are tax benefits for alimony payers that can help ease the burden of meeting this financial obligation. Do these benefits apply to all types of alimony?

According to the current tax code, those paying alimony can use it as a deduction when they file their taxes. Of course, to get this benefit, certain requirements have to be met. These include:

  • The ex-spouses must file separate tax returns
  • Alimony payments are made in cash, check or certified funds
  • There is a divorce decree or separation agreement in place
  • The payer and payee cannot live together
  • The payments are strictly for spousal support

So, funds paid for child support do not count as alimony and are non-deductible. Money paid to settle a property division issue does not count toward spousal support and is non-deductible. There has to be a clear order in place for the support payments and documentation that payments are made in some form of cash.

Of course, if the new tax law that is currently working its way through the halls of government passes, this alimony deduction may no longer be a benefit for those Massachusetts residents who choose to pursue divorce in the future. Those already enjoying the benefit will get to keep it. One's legal counsel will be able to answer any questions one has moving forward regarding the ins and outs of alimony, including if any portion of the required payments is tax deductible.

Source: accountingweb.com, "Tax Court: Alimony Payments May Not Be Deductible", Ken Berry, Dec. 8, 2017

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