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Is Alimony Tax Deductible?

Posted By Cairns Law Offices || 26-May-2015

Alimony, otherwise called "spousal support" is a regular payment that one spouse pays to the other spouse to provide financial support during and/or after the divorce. In a Pennsylvania divorce, the spouses can agree to an amount and duration of alimony, or if they cannot reach such an agreement, the court may order it.

Alimony payments are made as a part of a divorce agreement; they do not include any voluntary payments that are made outside of the divorce instrument.

Alimony & Taxes: What You Need to Know

Alimony payments are deductible for the payer. In contrast, the spouse who receives the alimony payments must report the payments as income.

In order for a payment to be considered "alimony," it must meet certain requirements. For example, the following types of payments are NOT alimony:

  • Child support;
  • A noncash property settlement;
  • Using the payer's property;
  • Payments made to keep the paying spouse's property; and
  • Payments that are your husband or wife's portion of community income.

What CAN be alimony:

  • Payments made to a third party under the terms of a separation or divorce agreement.
  • Life insurance premiums as a part of a divorce or separation instrument.
  • Payments made for jointly-owned property.
  • Mortgage payments on a jointly-owned home.
  • Taxes and insurance on a home held as tenants in common.
  • Other qualifying payments to a third party.

Requirements for Alimony

In order for a payment to a spouse to qualify as alimony, the spouses cannot file a joint return with each other and: 1) the payment is in cash, 2) the instrument does not say that the payment is not alimony, 3) the spouses are not living together, and 4) the payment isn't treated as child support.

To qualify as "cash payments," they must be in the form of cash, checks, or money orders.

Do you have further questions about alimony or divorce? Contact Cairns Law Offices to schedule a free consultation with an experienced Pennsylvania no fault divorce attorney!