Tax Tip: Deductible Alimony

If you pay alimony to an ex-spouse you may be able to claim an “above-the-line” deduction on your 1040. You must enter the Social Security number of your “ex,” who in turn must report the alimony received as taxable income. 

To be deductible, alimony payments must be in cash (or check) and required as a condition of the divorce decree. You and your “ex” must not live together in the same household, and payments must end upon the death of the “ex."

Deductible alimony is not limited to support payments. It includes payments made to a third party on behalf of your former spouse that are required under the terms of the divorce instrument. This could be payments for medical expenses, housing costs, taxes, tuition, life insurance premiums (if the former spouse owns the policy), etc. These payments are treated as received by your former spouse and then paid to the third party.

If you must pay all the mortgage payments (principal and interest) on a home you own jointly with your “ex” you can deduct half the payments as alimony.  If you are required to pay all real estate taxes and/or insurance on a home held as “tenants in common” you can claim half as alimony, but if the home is held as “tenants by the entirety” or “joint tenants” none of the payments are deductible as alimony.    

The above rules also apply to separate maintenance payments made under a separation agreement.

Child support payments are not deductible.

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