For purposes of determining alimony payments to report on tax returns, the Internal Revenue Service provides some fairly specific breakdowns on what is and is not considered alimony support by the IRS. Child support, for example, is not considered alimony, while payments that cover expenses for a home that you own in joint capacity with your ex-spouse could be considered alimony.
Other payments the IRS lists as not included in alimony calculations include use of your property by the other person, even if that use comes with a value or payments to keep up your own property in some situations. Noncash settlements and payments that are considered to be part of your ex’s “community income” are also not included as alimony.
If you make a payment on behalf of your spouse to a third party, this might be considered alimony. For example, if you pay a utility bill every month in lieu of paying your ex directly, the amount you pay could be considered alimony. Amounts paid to third parties would likely not be considered alimony if they were paid above and beyond required alimony payments already received by one spouse.
If one spouse is ordered to make a mortgage payment on a home that is jointly owned or makes it out of need or convenience, and the money paid would otherwise have been used to pay alimony, the IRS allows the payment to count partially toward alimony deductions. Specifically, the IRS says that the paying spouse can deduct half the mortgage payment as alimony and the receiving spouse must claim half as income.
As you can see, the rules for what is and isn’t alimony are quite complex under the IRS. If you are going through a divorce, make sure you work with your legal service providers to understand alimony and how that will impact you come tax time.
Source: Internal Revenue Service, “Alimony,” accessed June 10, 2016
