Last week's post in this blog discussed the basics of alimony in Minnesota. This week we're going to take a look at an issue that will probably be on the minds of many divorced Minnesotans between now and April 15: how should I deal with alimony payments on my tax return?
In general, because alimony payments are taxable income for the recipient, they are deductible by the payor. However, certain requirements must be met for a payment to be considered deductible alimony. First, you cannot deduct a payment if you and your ex-spouse are filing a joint tax return. Payments will not be deductible if, at the time of the payment, you and your ex-spouse live in the same household, or if you have an obligation to continue the payments after the death of your ex-spouse. To be deductible, the payments must be made in cash or by check or money order.
If the divorce agreement says the payments are not alimony, they are not deductible. Installment payments made to an ex-spouse in connection with the property division are not alimony. Child support payments are not alimony and are not deductible. If you are required to pay both child support and alimony, and you do not pay the full amount, the payments are allocated first to child support, and any remainder to alimony.
The information in this post is for general educational purposes only and should not be considered legal advice. If you have specific questions about the tax treatment of alimony or other payments made to an ex-spouse, you should talk to your tax preparation professional or a knowledgeable family law attorney.
Source: Findlaw, "Alimony and Taxes," accessed Feb. 14, 2015