Is alimony tax deductible? Yes. alimony, or spousal support, is taxable as income to the recipient. Only payments specifically made as part of the divorce decree or separation agreement are considered alimony for tax purposes, meaning that voluntary or bonus payments are not included.
From a tax perspective, temporary spousal support is equivalent to permanent spousal support. However, certain types of payments do not qualify as spousal support.
- Child support
- Non-cash payments
- Money for maintaining the payer’s property, such as repairs on a home
- Use of the payer’s property, for example, lending a home to a former spouse
Is Alimony Tax-Deductible?
Yes, spousal support is tax-deductible to the person paying it. Child support, however, is neither taxable to the recipient nor tax-deductible to the payer.
How Long Does Alimony Last?
Spousal support is not terminated until the date specified on the divorce decree, or until the court makes that decision. If the recipient marries again, spousal support from the former spouse is almost always terminated. Although not typical, there are situations when it is permanent. If the spouse is elderly (or has medical issues that hinder him or her from working), he or she may very well receive alimony for the rest of his or her life. If the payer passes away, the payer’s estate (and money from life insurance policies) may very well be granted to the former spouse.
Shawn Leamon, MBA, CDFA is the host of the “Divorce and Your Money Show” and Managing Partner of LaGrende Global, with offices in Dallas, New York, and Hanover, New Hampshire. His website is DivorceAndYourMoney.com. This article can be found on his site.