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Can alimony be deducted as an expense on tax returns?

Ohio residents who make alimony payments to a former spouse may generally deduct these payments on their income tax returns if the agreement to make the payments was entered into after 1984. The spousal support payments may be deducted because the person who receives them is required to declare them as income on line 11 of their 1040 return. However, this deduction may not be taken for child support payments as child support is never tax deductible.

There are some situations in which alimony payments may not be deducted. The alimony deduction is applicable only when the two spouses file separate tax returns, and spousal support may not be deducted if a couple remains in the same household or elects to continue filing a joint return. The payments must also be made by check, money order, cash or bank transfer to qualify for the deduction. The IRS will consider payments made to a former spouse to be alimony unless the divorce settlement or separation agreement states that the payments are not alimony or the requirement to make the payments does not end when the recipient dies.

Payments made as part of a property settlement are not considered alimony, and they may not be deducted, even when they are paid in installments. While many Ohio residents will claim an alimony deduction by filing an itemized return, alimony can also be deducted on line 34a of a standard 1040 form.

Discussions about property division and spousal support can sometimes become emotional. An experienced family law attorney may point out how deductible alimony payments could be an important consideration for spouses who will not be paying income tax at the same rate. In a situation such as this, an agreement could be reached where a spouse paying tax at a lower rate elects to take a lower settlement amount in return for higher support payments, which can be deducted from the tax return of the spouse paying income tax at a higher rate.

Source: Findlaw, "Alimony", November 03, 2014

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