Question

john and jane divorsed in 2018. They have two children, age 6 and 11. The divorce decree requires John to pay $800 a month to jane and does not specify the use of the money. According to the decree, the payments will stop after the children reach 18 or graduate from high school, whichever comes first. May Johm deduct payments as alimony?

Answer 1

For a payment to qualify as deductible alimony for federal income tax purposes, you must meet all seven of the following requirements.

1. The payment must be pursuant to a written divorce or separation agreement.

2. The payment must be made to or on behalf of your ex. Payments to third parties, such as attorneys and mortgage lenders, are okay if they are made on behalf of your ex pursuant to the divorce or separation agreement or at the written request of your ex.

3. Your obligation to pay must cease if your ex dies. Failure to meet this requirement is probably the most common cause of lost alimony deductions.

4. The payment must be in cash or cash equivalent.

5. The payment cannot be considered child support.

6. The divorce or separation agreement cannot say the payment is not alimony.

7. After you are divorced or legally separated (meaning after you are considered divorced for tax purposes), you and your ex-spouse cannot live in the same household or file a joint Form 1040.

Only payments that meet all of these requirements count as deductible alimony. Payments that fail to meet them are treated as either part of the divorce property settlement or as child support --both of which are nondeductible for you and tax-free for your ex.

Payments are considered deemed child support to the extent of future payment reductions that are triggered by any of the following child-related events:

• Attaining age 18, 21 or the age of majority under local law.
• Death of the child.
• Marriage of the child.
• Completion of the child's schooling.
• The child leaving the household.
• The child attaining a specified income level or becoming employed.

From the above analysis if a amount of $800 a month is treated as deemed support to child so such amount is nondeductible ailmoney while computing taxes