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Taxes and alimony deductions

Massachusetts residents who are either under an order to pay alimony or who receive it from their former spouses through court order or agreement need to be aware of how alimony is treated under federal income tax law. The IRS allows those who pay alimony to deduct the payments, while requiring those who receive it to report the amounts as income.

For federal tax purposes, amounts paid to the former spouse or on the former spouse's behalf can be claimed as deductible alimony payments if they are made under a court order or pursuant to an agreement. Any amounts paid that are for child support are not able to be deducted, and the spouse that receives child support does not have to report it as income.

Payments made to third parties for the benefit of the other spouse may also be considered alimony. This may include such things as payments for life insurance, medical expenses, rent, utilities and other amounts. If the alimony is a voluntary payment, it does not qualify and the payer cannot take a deduction for it. Others that are not treated as alimony for tax purposes include non-cash property settlements, any payments the payer makes to keep up their own property, any payments made so the payer can have use of the property or any payments that are part of the spouse's marital property settlement.

People who are going through a divorce in which alimony is expected may want to discuss their potential tax treatment with their family law attorney. The ability to claim a deduction for alimony that is paid may help divorcing spouses to reach an agreement regarding alimony, since the payer will receive a tax benefit for making the payments. If people already have an agreement or order in place, they may want to consult with their attorney about whether they can claim the amounts.

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