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Alimony payments must meet requirements to be deducted

A person who has terminated a marriage with a spouse may later be responsible for making several types of financial payments to the former spouse. Among those payments are child support, property settlements or alimony. In Florida, an alimony payment can be deducted from taxable income if it meets certain guidelines. If not, the payment remains taxable. 

In order to qualify as an alimony payment, the spouses must not file a joint tax return or be members of the same household when the payments are made. The alimony payment must be part of a divorce or separation instrument, and the payment must be made in cash or equivalent. The payment must be made to the former spouse, and the divorce agreement must not recognize the payment as something other than alimony. Finally, the payment must not be required to be made after the death of the recipient. 

In one recent court case, a couple separated and entered into a marital separation arrangement created by a non-attorney. The husband made payments under this agreement and deducted them as alimony. However, since the document did not have a clear provision that the payments would stop after the death of the recipient, nor did the state law have a clear provision on these types of arrangements, the Tax Court ruled that the payments were not alimony.

In this case, the man was not able to deduct the payments. It can be essential to understand exactly what payments are alimony and which are not for tax reasons. An experienced lawyer can also be a helpful tool for some in Florida because a lawyer is likely to have knowledge of the applicable federal and state laws. 

Source: accountingweb.com, "Tax Court: Alimony Payments May Not Be Deductible", Ken Berry, Dec. 8, 2017

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