Understanding alimony: How the IRS defines alimony
As the tax consequences of an alimony award will affect the overall financial standing of both the paying spouse and the recipient, the court will take this factor into account when ruling on spousal support – should that maintenance be deemed appropriate after a marriage.
In order for an award to be tax-deductible for the payer and subject to income tax for the recipient, it must be recognized as alimony by the federal and state government.
Even if financial support is mandated by a divorce settlement and is specified as alimony therein, the International Revenue Service (IRS) may not consider it alimony.
“Florida cases have held that when examining a clause awarding alimony, no matter what label is given to the award, its legal effect is determined not by what it is called, but by what it does,” the Florida Bar Journal states.
To qualify as alimony for tax purposes, the following statements must apply:
- The divorce settlement does not define the payments as anything other than alimony
- The legal obligation to provide support ceases after the payee spouse has died
- The payments are received by the payee spouse or on his or her behalf
- The payer and recipient do not file a return as part of the same household
- The payments must be decreed by a divorce settlement
- The spousal support is paid in cash, including checks and money orders
- The support cannot be considered property settlement or child support
Tax regulations are just one of many matters to contend with when you are seeking or combating an alimony award in your divorce settlement. To simplify this process and plead your best case for or against spousal support, consider hiring a Miami family lawyer. Scott A. Ferris, Esq. is an attentive Miami divorce lawyer who has been practicing family law throughout Florida and outside of the state for 25 years.