Understanding alimony: Payments the IRS may not treat as alimony

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Previously, this blog reviewed the specific definition of alimony employed by the International Revenue Services. In order to qualify for tax deductions on the behalf of the provider, and to be considered taxable income for the recipient, an alimony award must adhere to the federal government’s definition of the term.

In addition, it is important to be familiar with the specific forms of spousal support that are not treated as alimony by the IRS. These payments include:

  • Child support
  • Property settlements
  • Support paid to keep up the provider’s property
  • Use of said property
  • Voluntary support that is not dictated by the divorce settlement

Note that, depending on how you structure your divorce settlement, payments that are intended to be alimony may not be considered as such by the IRS.

If durational alimony is directly linked to the children from a marriage, for instance, it may be viewed as child support by the tax-collecting body. An example of this would be a case where alimony payments are set to cease when a child turns 18. If the IRS deems this award to be child support, it may not be subject to taxes. This means it is not eligible for a tax deduction on the part of the provider, and will also not be treated as taxable income for the receiving spouse.

In addition, if lump sum alimony is awarded as a means to make up for a discrepancy in the equal distribution of property and other assets, it may be treated as a property settlement by the IRS, and will therefore not qualify as alimony.

For help deciphering U.S. tax code and how it may relate to your divorce settlement, seek out the counsel of a Miami divorce lawyer. Scott A. Ferris, Esq. is an experienced Miami divorce lawyer who devotes personal attention to every case.