Some Tax Implications of Divorce

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GENERAL INFORMATION:

Do I have to count the alimony (or maintenance) money that I receive from my ex-spouse each year in my tax forms?
Yes. Alimony, or Maintenance, is gross income to the payee (spouse receiving the money) and is a deduction for the payor (spouse paying the money).

Can I deduct the alimony payments I make each year to my spouse?
Yes, if you meet a few requirements. In order to be a deduction, alimony must be paid in cash and must be received by and on behalf of the payee spouse. This means the payments must be by cash, check, or money order payable upon demand. Transfers of property or services do not qualify as deductible. The payments must be made under a divorce decree, a written separation agreement, or a written agreement that was part of the divorce. The parties must not be members of the same household.

My wife and I agreed that I would make her alimony payments to her sister, because my wife needs some assistance with finances. Can I deduct these alimony payments I make, even if I don’t make them directly to my wife?
Yes. Payments can be made to third parties on behalf of the payee spouse, but there must be consent to the third party payment that is in writing, and the writing must state that the parties intend to treat the payment as subject to the alimony rules, and it must be received by the payor before the filing date of his/her tax return for the tax year in which the payment was made. The payments must be made under a divorce decree, a written separation agreement, or a written agreement that was part of the divorce. The parties must not be members of the same household.

Are child support payments deductible?
No. Payments made for the support of children are not deductible by the payor, and the payee spouse does not include child support money in reported gross income.

If my wife has custody of our kids, but I pay a lot of money in child support, can I claim my son as a dependent on my taxes?
It depends. If you and the custodial parent have made an agreement which allows you and your spouse to claim your son in alternate years, for instance, then you can claim the child in those alternate years. Your wife may agree to allow you to claim the child as a dependent for just one year, for a specified number of years, or for all future years. However, if your wife claims the children as dependents, and she has not waived that exemption, since she is the custodial parent, you cannot claim your son as a dependent.

If my spouse and I were divorce in January of this year, can I file as a single person?
Maybe. Filing status is determined by your marital status on the last day of the tax year.

In your case, since you divorced in January, then you were married on the last day of last year, or the tax year. Since this is the case, you are only entitled to file as a single taxpayer if the following requirements are met:
  1. You must file a separate return;
  2. You must furnish more than one-half the cost of maintaining a household that, for more than half the tax year, is the principal home of the child (including an adopted child) or stepchild;
  3. You are entitled to a dependency exemption for the child (or would be so entitled except for waiver of the exemption to your spouse); AND
  4. The other spouse was not a member of your household at any time during the last six months of the year.


Reviewed August 2009