According to the Internal Revenue Service, alimony is defined as a “payment to or for a spouse or former spouse under a divorce or separation agreement.” This is important because it shows that in order to deduct or report alimony payments for tax purposes, it must be part of a legal court order and not something that was just agreed upon informally between the two parties.
Alimony is usually an issue in marriages where the couple has been married for several years and has a significant level of income. Unlike child support, alimony is considered part of the income that the recipient must report on their taxes. Therefore, it also becomes part of your income for all other intents and purposes such as qualifying for federal or state benefits or income-based financial awards.
It’s also important to make sure that when reporting or deducting alimony payments you are reporting the correct amount that was actually paid and not necessarily what was ordered. If you are behind on your payments and have been only making partial payments, you would not be able to deduct the full ordered amount.
Not deducting your alimony payments on your taxes can hurt you financially and possibly cause you to not get the full tax refund you may be entitled to. However, failing to report alimony payments as income can result in negative legal consequences. If you have questions about how your court order set up your alimony or spousal support payments, it’s a good idea to go over your paperwork and next steps with your family law attorney.
Source: IRS, “Alimony,” accessed Oct. 16, 2015