What You Need to Know About Alimony & Taxes

If you are filing for divorce in Nassau County and there is a possibility that the family law judge handling your case may award alimony, otherwise known as spousal support or "maintenance" in New York, it will be necessary for you to understand the role that alimony plays with regards to taxes.

Whether you are the paying spouse or the receiving spouse, special tax rules will apply.

Alimony or maintenance is money that a spouse pays to their former spouse in a separation or divorce. However, maintenance does not include any voluntary payments; for example, cash payments made directly to the former spouse that weren't made as a part of the legal separation or divorce.

In order for a payment to qualify as maintenance, it must meet certain criteria. According to the Internal Revenue Service (IRS), maintenance does not include:

  • Payments for child support,
  • Use of the paying spouse's property,
  • A noncash property settlement, or
  • Payments that are used to maintain the payer's property.

What Can Be Maintenance

The following types of payments can be considered alimony in a divorce:

  • Payments that are made to a third party on behalf of a spouse.
  • Payments made to cover the cost of life insurance premiums.
  • Payments made for a home owned by both parties.
  • Mortgage payments on a jointly-owned home.
  • Real estate taxes and insurance on a home owned as tenants in common.
  • Certain other payments made to a third party.

While the above payments can be considered maintenance, they must be a part of the legal separation or divorce instrument to be enforceable. If you are considering one of the above methods of paying alimony, you should discuss these possibilities with a qualified Nassau County divorce lawyer.

Special Considerations

Take note of these considerations about maintenance: (1) payments made to a spouse while you are both members of the same household are not alimony if you are legally separated or divorced, (2) child support is not alimony, (3) alimony is tax deductible for the payer, and (4) the recipient must report the alimony as income.

Have further questions about alimony in New York? Contact Jason M. Barbara & Associates, P.C.to schedule a free consultation with a Nassau County divorce lawyer.