Does a Divorce Raise Any Federal Income Tax Issues?
The first tax issue that a person may want to consider when deciding to divorce is how spousal support payments (also referred to as alimony or separate maintenance payments) are treated for tax purposes. If an individual will be paying spousal support to his or her ex-spouse, the amount of the payments can be deducted when computing adjusted gross income. The payee spouse must include alimony payments in his or her gross income. A payment qualifies as alimony or separate maintenance if: • The payment is in cash • The payment is received by a spouse pursuant to a divorce or written separation agreement • The divorce or separation agreement does not designate the payment as not being alimony for tax purposes • The payor spouse and payee spouse are not members of the same household after a divorce or legal separation at the time the payment is made • The obligation to make payments ends when the payee spouse dies • There is front loading of the payments, the excess payments are recapture
