Do I Have To Pay Taxes on Spousal Support?

There are tax implications concerning spousal support as a result of the dissolution of marriage. Typically, the most common implication is deciding exactly who can claim the deduction on spousal support, both at the state and federal level. Any individual that has been ordered to pay spousal support to their ex-spouse has the legal right to deduct the full amount of their payment to reduce their taxable income. Alternatively, the spouse that receives the spousal support is required by both federal and state law to report the money as taxable income.

The bottom line is that the tax implication will only apply to the divorced couple that holds a judge’s order on the dissolution of their marriage. Individuals who do not have a court order that specifically claims that they are legally separated must claim any spousal support payment solely as a gift (for any tax purpose).

In essence, any gift cannot be claimed as a deduction on their income tax by the paying spouse nor can it be taxed as income on the spouse that receives it. Additionally, the spousal support payment is not required to be itemized so that the spouse who is paying the support can qualify for the tax deduction.

There are specific requirements for spousal support that must be met in order to qualify for any tax advantage.

To be a tax deduction, the support payment to the ex-spouse must be:
    • Offered as cash money
    • Made only to the ex-spouse at a time when the couple was not living in the same household
    • Instantly terminated upon death of the spouse receiving the support
    • Be fully authorized through a court order declaring either legal separation or divorce
    • Included as taxable income for the receiving spouse
    • A properly court ordered spousal support and not any portion of a child support payment or property division
It must be noted that the requirements for qualification on spousal support vary under state law when compared to federal law. As required by the IRS, each party, either providing or receiving the spousal support, must understand and follow the strict definition as defined by law.

Working with an ex-spouse through the process can be a challenging task. To ensure both parties are receiving a maximum tax benefit, it is essential to work together through an experienced attorney who generally handles spouse support tax matters. This will ensure neither side is violating any regulations of the Internal Revenue Service.

By Kenny Leigh

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