2013 Alimony Tax Treatment
People involved in a divorce and alimony payments must understand the tax significance of paying or receiving alimony to properly report their income. The IRS categorizes alimony as amounts paid according to a divorce or separate maintenance legal decree. The IRS Tax Topic 452, Alimony Paid, updated May 30, 2013, describes the following conditions associated with paid alimony.
- The payment is neither child support nor a property settlement
- Neither spouse files a married joint income tax return
- Payments are made in cash or its equivalent rather than property
- A payment is received by some third party on behalf of one spouse
- Legal decrees do not state a specific payment is not alimony
- IRS rules defining legal separation are in effect when payments are made
- There is no liability for payment after death
The IRS does not consider any of the following as alimony:
- Child support
- Noncash property settlements whether lump sum or installments
- Voluntary payments not required by an agreement or court decree
- Payments considered part of community property income
- Use of or payments for maintenance of a payer’s property
The payer of alimony deducts the payment from their reported income on their tax return; the recipient of alimony adds alimony payments as taxable income. In the event, a court decree orders both alimony and child support, the amount of alimony paid out is the balance of payment after child support has been paid in full.
It is not necessary to use a Schedule A, Itemized Deductions to adjust income when paying alimony. The adjustment to income must be entered on IRS Form 1040 or Form 1040NR, Schedule NEC. Make certain you provide the Social Security number of the recipient of the payments. Failure to properly report this information is subject to a $50 penalty. You cannot file IRS Form 1040EZ, Form 1040A, or Form 1040NR-EZ. You can find online references to this topic and specific income tax forms at the IRS website. Seek professional advice when filing your federal or state income tax return.
See IRS Publication 504, Divorced or Separated Individuals for additional information. The 2004 version of this publication includes special information regarding the tax treatment of alimony before 1985.
Other online references related to how alimony is reported on US Income Tax:
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