Taxes on Alimony and Child Support

 

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 you must include them in your 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 for the spouse — must receive the payment under a divorce or separation instrument.
  • The agreement can’t specifically exclude the payment from being either of these:
    • Included in the recipient’s income
    • Deducted by the payor spouse
  • The spouses can’t be members of the same household when the payment is made if divorced or legally separated.
  • Liability for payments must end upon the death of either spouse.

The amount you pay might depend on the life event of a child. If so, you can’t claim the payment — or the portion affected by the event — as alimony.

The law allows recapture of certain alimony deductions. This keeps large payments from being treated as deductible alimony in the first few years after a divorce. Instead, they can be treated as a nondeductible property settlement.

You’re subject to the recapture rule in the third year if either of these applies:

  • The alimony you pay in the second and third years decreases significantly from what you pay in the first year.
  • The alimony you pay in the third year decreases by more than $15,000 from the second year.

Your former spouse might die or remarry. If either happens, you don’t have to worry about recapture if payments stop in the second or third year.

To learn more, see Publication 504: Divorced or Separated Individuals at www.irs.gov.

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