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Protecting What Matters Most

Are alimony payments tax deductible?

On Behalf of | Oct 12, 2021 | Alimony

Alimony payments are legal agreements between former spouses or still married spouses undergoing a long separation. When a couple divorces in Rhode Island, the spouse with a lesser income commonly receives these support payments.

How alimony is determined

Many different factors determine how much someone can receive in an alimony payment. The length of the marriage, an agreement between the two former spouses, or a divorce court ruling can set the amount and frequency of the payments. Court rulings can also set an expiration date for the payments with conditions such as:

• The receiving spouse makes no effort to find employment.
• The receiving spouse remarries.
• The paying spouse no longer has an income.
• The receiving spouse no longer needs the money.
• One of the spouses dies.

Can alimony payments affect my income taxes?

If your divorce agreement was finalized after Dec. 31, 2018, the paying spouse can no longer take alimony payments as a tax deduction. Those who divorced before that date can still take a tax deduction if the payment is:

• Made in some form of cash
• authorized by a court order
• Proper spousal support
• Included in the receiving spouse’s taxable income
• Both spouses file separate tax returns

For agreements made after the above date, the paying spouse cannot deduct the alimony payments from income taxes. However, the receiving spouse does not have to claim it as income.

Not every payment made is considered alimony

Divorce payments can take the form of non-cash property settlements, voluntary payments, and more. Determining what is and what is not alimony can be confusing in many cases.

The way spouses divide property in a divorce can have a variety of tax implications. Carefully planning your divorce agreement can possibly help you avoid unnecessary income taxes.