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Divorce Law

When the Thrill of Victory Becomes the Agony of Non-Compliance:  Enforcing a New York Divorce Judgment or Family Court Order

General Requirements for Alimony Payments To Be Tax-Deductible:

For payor spouses, significant tax benefits can be achieved by structuring a marital agreement to ensure that payments are treated by the IRS as alimony. The following six general rules should be followed.
  1. Payments are not classified as property settlement or child support. Take care not to classify payments as child support or part of the property settlement (equitable distribution). Neither is tax-deductible. If you want alimony to be deductible make sure it is in no way connected to the children or as part of your marital property.
  2. Payments are made in cash (this includes checks or money orders). In-kind alimony is not tax-deductible. Allowing your spouse to use property is not considered alimony for tax purposes.
  3. The spouses do not file taxes jointly.
  4. The agreed upon separation (legal separation or divorce) agreement does not say that the payment is not alimony. Carefully read the terms of a marital property settlement before you sign it.
  5. Payments stop upon the recipient's death. The settlement agreement or judgment must specify that alimony payments terminate when the recipient dies.
  6. Spouses are not living with each other. This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance.

What About Payments to Third Parties for Benefit of a Spouse or Former Spouse?

With respect to third party payments, IRS Publication 17 (2014) provides as follows:

Cash payments, checks, or money orders to a third party on behalf of your spouse under the terms of your divorce or separation instrument can be alimony, if they otherwise qualify. These include payments for your spouse's medical expenses, housing costs (rent, utilities, etc.), taxes, tuition, etc. The payments are treated as received by your spouse and then paid to the third party.

Payments that Generally Do Not Qualify as Alimony:

Not all payments under a divorce or separation instrument are alimony. Alimony does not include:
The tax requirements regarding alimony should be carefully considered before you execute a marital settlement agreement. The divorce attorneys at Rapaport Law Firm have helped New York and New Jersey residents with divorce and other family law matters since 1995. If you have questions, give us a call at (212) 382-1600

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One Penn Plaza
Suite 2430
New York, New York 10119
Phone: 212.382.1600
Facsimile: 212-382-0920