How to determine whether payment of money to a spouse post-divorce qualifies as alimony under Internal Revenue Code §71 for tax-deduction purposes – Part 2.

This post continues discussion of Make the Tax Code Your Friend, an article from the Winter 2012 Family Law Advocate journal of the American Bar Association by Christopher Melcher.

Rule 3: Payments must be made under a divorce or separation instrument.

This means a written, formal agreement or court order. The written instrument must be in existence at the time the payments are made.

Rule 4: The instrument does not say that payments are non-taxable/non-deductible.

If the parties designate the payments as non-taxable, they will be bound by their agreement. On the other hand, saying a payment is taxable doesn’t make it taxable unless/until the IRS agrees.

Rule 5: The parties must not live together, unless the alimony is temporary.

If there is a legal separation of the parties, but they are not divorced, payments made for support are deductible even if the parties are members of the same household when the payments are made. Once a divorce is finalized, the parties cannot continue to share the same household for more than one month or the payments will not qualify as alimony.

For an overview of Texas alimony laws, please see our website O’Neil & Attorneys.

For additional information about alimony and maintenance in Texas, see the following blog posts here on the Dallas Texas Divorce Law Blog:

• Maintenance in Texas – Part 1: History
• Maintenance in Texas – Part 2: Eligibility
• Maintenance in Texas – Part 3: Amount, Duration, and Enforcement
• Eight Simple Rules for Tax-Deductible Alimony – Rules 0-2
• What You Need to Know about Alimony/Maintenance in Texas
• Dallas Divorce Attorney Prevails On Appeal: No Garnishment for Contractual Alimony
• Alimony in Texas?!? Well, sort of . . .
• Alimony in Texas?!? [Part 2 of 2]