Eight Simple Rules for Tax-Deductible Alimony – Rules 6-8

By Michelle O'Neil on April 24, 2012

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 3.

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

Rule 6: Payments must terminate on the death of the payee.

This requirement was adopted to distinguish between property settlement in the divorce and true alimony. “Dead people require little, if any, support,” so for alimony to be tax-deductible, the payment should terminate upon the death of the supported spouse. See Taft, Tax Aspects of Divorce and Separation, §5.03[1][v]. On the other hand, an obligation regarding the division of marital property survives the death of either party because it creates a vested property right that can be transferred on death. So, if any of the payments are required to be on or after the death of the supported spouse, the payments look like a property division, rather than for maintenance.

If this rule is violated, none of the payments before or after the death of the spouse qualify as alimony.

Rule 7: Payments may not be fixed as child support.

Payments designated as child support are not deductible as alimony. Even if a payment is labeled as “alimony” the payment may be treated as disguised child support if the amount of the payment reduces upon some contingency related to a child.

Rule 8: A joint return is not filed.

The final requirement is that the parties file separate tax returns. They cannot file a joint tax return together, with one claiming an alimony as income and the other claiming the tax-deduction for alimony paid.

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: