J.K. Lasser's 1001 Deductions and Tax Breaks 2022. Barbara Weltman
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be called alimony, support, or spousal maintenance, depending on state law (called “alimony” here for convenience). The tax law, in most cases, imposes symmetry on the treatment of alimony so that the government effectively comes out even, as explained below.
Benefit
If you have a divorce or separation agreement executed before 2019, and you make payments to a spouse or former spouse for alimony, support, or spousal maintenance, you can deduct the payments if certain conditions are met. There is no dollar limit on this deduction. The deduction is claimed as an adjustment to gross income; you do not have to itemize your other deductions to write off alimony payments you make. But if you make payments pursuant to a divorce or separation agreement executed after December 31, 2018, you cannot deduct your payments.
Conditions
There are 4 conditions that must be met for payments made under a pre‐2019 divorce decree or separation agreement to a spouse or former spouse to be considered alimony:
1 Amounts must be paid pursuant to a legal requirement, such as a court decree.
2 Payments must be made in cash.
3 You must live apart from your spouse or former spouse.
4 Your responsibility to make payments must terminate on the death of your spouse or former spouse.
Typically, alimony that is deductible by the payer is taxable to the recipient—the government effectively nets no additional tax revenue from the arrangement. But this symmetry is not required. If you meet all of the conditions, you can deduct your alimony payments even if your former spouse is not required to pay tax on them (for example, your former spouse lives abroad where alimony is exempt income).
PAYABLE UNDER A COURT DECREE
You can't deduct alimony under a pre‐2019 divorce decree or separation agreement if you voluntarily make payments. You must either be ordered to do so under a decree of divorce, legal separation, or support or agree to make payments under a written separation agreement.
If the marriage is annulled and you are ordered to make payments, they can be treated as alimony if the other conditions are satisfied.
CASH PAYMENTS
You can deduct only payments under a pre‐2019 divorce decree or separation agreement made in cash. But you don't necessarily have to make these payments directly to your spouse or former spouse. Payments made on behalf of your spouse or former spouse qualify for the deduction if required by the divorce decree or separation agreement. For example, if you are ordered to pay your former spouse's rent with a check directly to the landlord, you can treat the payment as alimony if the other conditions are met.
If you continue to own the home in which your former spouse resides (i.e., own it by yourself or jointly with your former spouse) and you pay the mortgage and other expenses, only some of these expenses qualify as deductible alimony—even if you are required to make the payments under the terms of a divorce decree or separation agreement. If you own the home, you benefit from the payment of the mortgage, real estate taxes, and other maintenance on the property and cannot deduct these payments. If you own the home jointly, only one‐half of your payments can be treated as alimony because only one‐half benefits your spouse or former spouse. (Of course, you can deduct mortgage interest and real estate taxes as itemized deductions as explained in Chapter 4.)
LIVING APART
To deduct payments under a pre‐2019 divorce decree or separation agreement, you and your spouse or former spouse must not live in the same household. This means separate residences; merely having separate bedrooms in the same home is not good enough for payments to be treated as alimony.
However, payments made while you are preparing to leave can be deducted. There is a one‐month limit so that only payments made within one month prior to your departure can be treated as alimony. If it takes you longer to move out, your earlier payments are not deductible.
Payment Responsibility Ends on Death
Your responsibility to make payments to your spouse or former spouse must end if that person dies in order for payments under a pre‐2019 divorce decree or separation agreement to be deductible alimony. If your obligation to make payments continues beyond the recipient's death (for example, you must continue to pay until total payments reach a set amount), you cannot treat any of the payments as alimony (even those made before death).
Generally, the divorce decree should state that your obligation to make payments ends on the recipient's death. But this isn't necessary as long as this condition is part of the law in your state.
The fact that your estate continues to be liable for payments after your death does not prevent you from treating your payments as alimony.
Planning Tips
If you have a pre‐2019 divorce decree or separation agreement, don't make voluntary payments if you want to deduct them. For example, don't make payments prior to a court order or separation agreement and don't voluntarily increase your payments. If you want to ensure that increased payments qualify as deductible alimony, you need to amend the court order or separation agreement to incorporate the change. If a pre‐2019 divorce decree or separation agreement is changed or amended, the old alimony rules continue to apply unless the revised document specifically says that the new rules (i.e., that payments are not deductible by the spouse who pays or taxable to the spouse who receives) should apply.
Pitfalls
Payments made to someone who was never legally your spouse cannot be treated as alimony. For example, if you make payments to a domestic partner, you cannot deduct them even though they otherwise have all the earmarks of alimony.
Property settlements are not deductible.
Where to Claim the Deduction
The amount of deductible alimony payments is entered on Schedule 1 of Form 1040 or 1040‐SR. There is no separate form or schedule to complete when deducting alimony. However, you must include the recipient's Social Security number on your return (to allow the IRS to cross‐check whether the recipient reported the alimony as income) and the date of the divorce or separation agreement (to allow the IRS to see whether alimony is deductible).
ABLE Accounts
If you have a child who became disabled before age 26 or meets certain eligibility conditions, there is a special savings account that generally does not adversely impact eligibility for means‐tested government programs (e.g., Medicaid). The account can be used on a tax‐free basis for various disability‐related expenses (including funeral and burial costs). See details in Chapter 2.
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