Alimony and Child Support in content page of articles
There's a tax difference between alimony and child support payments. A person making qualified alimony payments can deduct them. Alimony payments received by the former spouse are taxable and must be included in income. The payor can’t deduct child support, and payments are tax-free to the recipient.
To qualify for the alimony deduction:
You must make the payment in cash, not property.
A spouse -- or someone on behalf of the spouse -- must receive the payment under a divorce or separation instrument.
The agreement can’t specifically exclude the payment from being included in the recipient's income or deducted by the payor spouse.
If the spouses are divorced or legally separated, they can’t be members of the same household when the payment is made.
Liability for payments must cease upon the death of either spouse.
If the amount you pay depends on the life event of a child, you can’t claim the payment -- or the portion affected by the event -- as alimony. Ex: If your divorce decree states the payor spouse can reduce the payment when your child graduates high school, the payor can’t claim as an alimony deduction the portion of the payment affected by this event. The payee spouse also won’t include that portion of the payment as income.
The law provides for recapture of certain alimony deductions. This prevents large payments in the first few years after a divorce from being treated as deductible alimony rather than a nondeductible property settlement.
You're subject to the recapture rule in the third year if either applies:
The alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year.
The alimony you pay in the third year decreases by more than $15,000 from the second year.
If your former spouse dies or remarries, you don't have to worry about recapture if payments stop in the second or third year.
To learn more, see IRS Publication 504: Divorced or Separated Individuals.