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More About Tax Treatment of Alimony or Spousal Support

By Janet Langjahr

It’s tax season.

Alimony or spousal support is deductible by the paying spouse or ex.

Alimony or spousal support is includible by the receiving spouse or ex.

As long as the alimony is required by a court order. One adopting and approving a settlement agreement will suffice.

End of discussion? Not quite.

Note that the alimony or spousal support check doesn’t have to be made out to the spouse or ex, or even given to them directly.

Payments made directly to a third party for the spouse or ex’s account are treated as alimony or spousal support … as long as the payments are required by court order. Again, one adopting and approving terms of settlement will do.

Examples of third party payments that may fall under this heading are medical expenses paid to health care providers, rent or mortgage payments paid to landlord or lender, tuition payments made to an educational institution, life insurance premiums paid to an insurer, auto insurance payments made to an insurer, car payments made to a lessor or lender, etc., etc.

Similarly, if a spouse is required to make the entire mortgage payment on a home co-owned with a spouse or ex, half the payment may be deducted as alimony or spousal support by the paying spouse or ex.

If a spouse is required to pay real estate taxes and/or insurance on a home co-owned as tenants in common (the most common arrangement after divorce), half the payment may be deducted as alimony or spousal support by the paying ex.

But taxes and insurance are not deductible by the paying ex if the former spouses own the real estate as joint tenants after the divorce (less likely).

Type of real property ownership is a technical legal issue with nontax consequences as well as tax consequences.

Each spouse should consult with their own attorney regarding which type of real state ownership best suits their particular needs, and also to ensure that the new deeds are drafted so as to conform to those needs.

Read more in this Main Street piece: Tax Tip: Deductible Alimony.

Full post as published by Florida Divorce - Child Custody - Domestic Abuse Law on March 06, 2011 (boomark / email).