Alimony and Taxes

How to Report Taxable Alimony on Your Return

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Alimony is taxable income for the recipient and it's a tax deduction for the payer. The recipient reports alimony on line 11 of Form 1040, and the taxpayer who pays it can deduct the amount on line 31a. It's an "above the line” deduction on page one of the return so it’s not necessary to itemize to claim it. 

Reporting Alimony Received

You must report the full amount of alimony—or separate maintenance if your divorce isn’t final yet—that you received during the year.

You do not have to report any amounts you received for child support. Child support paid and received between parents is considered a non-taxable event. It’s not reported on your federal tax return and the parent paying it cannot claim it as a tax deduction.

According to the IRS, "If you are the spouse or former spouse who is receiving the alimony, you must report the full amount as income on line 11 of Form 1040. If you do not give your Social Security number to your spouse or former spouse who is making the alimony payments, you may have to pay a $50 penalty."

Reporting Alimony Paid

If you paid alimony or separate maintenance to your spouse or ex-spouse, report the total amount you paid on line 31a. Report your ex-spouse's Social Security number on Line 31b.  

Requirements for Deductible Alimony 

Alimony is only tax deductible if you meet certain requirements. If it's not deducted, it does not have to be reported as income to the recipient.

 

  • You cannot file a joint tax return with your spouse, assuming you’re able to do so because your divorce is not final yet.
  • You must pay alimony in cash, which includes checks or money orders. If you give property or an asset in lieu of alimony, it’s not deductible.
  • The payment must be received by or on behalf of your spouse or former spouse.
  • Your divorce decree, separate maintenance decree or written separation agreement does not say that the payment is not alimony. In fact, it should clearly state that it is. 
  • You and your former spouse cannot live in the same household when you make payments.
  • You have no liability to continue making payments after the death of your former spouse. Ideally, your divorce decree or separate maintenance agreement should clearly state this as well.
  • Your payment is not treated as child support and is not a property settlement.

The Recapture Rule

The Internal Revenue Service reserves the right to “recapture” your deductions if it determines that the payments were actually a property settlement or child support. This might happen if the amount of your payments drops significantly or your payments end entirely within three years.

Specifically, your payments cannot decrease by $15,000 or more in the third year compared to what they were in the second year, or the last two years’ payments can’t be “substantially less” than what they were in the first year. No dollar amount is attached to the “substantially less” rule—it’s somewhat open to IRS interpretation. The idea is to prevent spouses from camouflaging property settlements as alimony.

Property settlements are often completed within the first three years after divorce. 

The IRS makes exceptions for circumstances beyond your control, such as if alimony is modified downward due to an unforeseen financial crisis.

The recapture rule adds the amount of your deducted alimony back to your taxable income in future tax years, at which time it becomes taxable. 

For strategy ideas on how to plan out alimony before finalizing your divorce, please visit our article on Tax Planning Principles for Divorcing Couples based on an in-depth conversation with Susan Carlisle, CPA.

NOTE: Tax laws change periodically, and you should consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.