The following rules for alimony apply to payments under divorce or separation instruments executed after 1984.taxmap/pub17/p17-095.htm#en_us_publink1000172886
There are two situations where the rules for instruments executed after 1984 apply to instruments executed before 1985.
- A divorce or separation instrument executed before 1985 and then modified after 1984 to specify that the after-1984 rules will apply.
- A temporary divorce or separation instrument executed before 1985 and incorporated into, or adopted by, a final decree executed after 1984 that:
- Changes the amount or period of payment, or
- Adds or deletes any contingency or condition.
For the rules for alimony payments under pre-1985 instruments not meeting these exceptions, see the 2004 revision of Publication 504 on the IRS website at www.irs.gov
In November 1984, you and your former spouse executed a written separation agreement. In February 1985, a decree of divorce was substituted for the written separation agreement. The decree of divorce did not change the terms for the alimony you pay your former spouse. The decree of divorce is treated as executed before 1985. Alimony payments under this decree are not subject to the rules for payments under instruments executed after 1984.taxmap/pub17/p17-095.htm#en_us_publink1000172888
Assume the same facts as in Example 1 except that the decree of divorce changed the amount of the alimony. In this example, the decree of divorce is not treated as executed before 1985. The alimony payments are subject to the rules for payments under instruments executed after 1984.taxmap/pub17/p17-095.htm#en_us_publink1000172889
A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met.
- The payment is in cash.
- The instrument does not designate the payment as not alimony.
- The spouses are not members of the same household at the time the payments are made. This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance.
- There is no liability to make any payment (in cash or property) after the death of the recipient spouse.
- The payment is not treated as child support.
Each of these requirements is discussed next.
Only cash payments, including checks and money orders, qualify as alimony. The following do not qualify as alimony.
- Transfers of services or property (including a debt instrument of a third party or an annuity contract).
- Execution of a debt instrument by the payer.
- The use of the payer's property.
Cash payments to a third party under the terms of your divorce or separation instrument can qualify as cash payments to your spouse. See Payments to a third party
under General Rules
Also, cash payments made to a third party at the written request of your spouse may qualify as alimony if all the following requirements are met.
- The payments are in lieu of payments of alimony directly to your spouse.
- The written request states that both spouses intend the payments to be treated as alimony.
- You receive the written request from your spouse before you file your return for the year you made the payments.
You and your spouse can designate that otherwise qualifying payments are not alimony. You do this by including a provision in your divorce or separation instrument that states the payments are not deductible as alimony by you and are excludable from your spouse's income. For this purpose, any instrument (written statement) signed by both of you that makes this designation and that refers to a previous written separation agreement is treated as a written separation agreement (and therefore a divorce or separation instrument). If you are subject to temporary support orders, the designation must be made in the original or a later temporary support order.
Your spouse can exclude the payments from income only if he or she attaches a copy of the instrument designating them as not alimony to his or her return. The copy must be attached each year the designation applies. taxmap/pub17/p17-095.htm#en_us_publink1000172894
Payments to your spouse while you are members of the same household are not alimony if you are legally separated under a decree of divorce or separate maintenance. A home you formerly shared is considered one household, even if you physically separate yourselves in the home.
You are not treated as members of the same household if one of you is preparing to leave the household and does leave no later than 1 month after the date of the payment. taxmap/pub17/p17-095.htm#en_us_publink1000172895
If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree, or other court order may qualify as alimony even if you are members of the same household when the payment is made.
|Table 18-1. Alimony Requirements (Instruments Executed After 1984) |
| Payments ARE alimony if all of the following are true: || Payments are NOT alimony if any of the following are true: |
|Payments are required by a divorce or separation instrument.||Payments are not required by a divorce or separation instrument.|
|Payer and recipient spouse do not file a joint return with each other.||Payer and recipient spouse file a joint return with each other.|
|Payment is in cash (including checks or money orders).||Payment is: |
- Not in cash,
- A noncash property settlement,
- Spouse's part of community income, or
- To keep up the payer's property.
|Payment is not designated in the instrument as not alimony.||Payment is designated in the instrument as not alimony.|
|Spouses legally separated under a decree of divorce or separate maintenance are not members of the same household.||Spouses legally separated under a decree of divorce or separate maintenance are members of the same household.|
|Payments are not required after death of the recipient spouse.||Payments are required after death of the recipient spouse.|
|Payment is not treated as child support.||Payment is treated as child support.|
| These payments are deductible by the payer and includible in income by the recipient. || These payments are neither deductible by the payer nor includible in income by the recipient. |
If any part of payments you make must continue to be made for any period after your spouse's death, that part of your payments is not alimony, whether made before or after the death. If all of the payments would continue, then none of the payments made before or after the death are alimony.
The divorce or separation instrument does not have to expressly state that the payments cease upon the death of your spouse if, for example, the liability for continued payments would end under state law. taxmap/pub17/p17-095.htm#en_us_publink1000172900
You must pay your former spouse $10,000 in cash each year for 10 years. Your divorce decree states that the payments will end upon your former spouse's death. You must also pay your former spouse or your former spouse's estate $20,000 in cash each year for 10 years. The death of your spouse would not terminate these payments under state law.
The $10,000 annual payments may qualify as alimony. The $20,000 annual payments that do not end upon your former spouse's death are not alimony. taxmap/pub17/p17-095.htm#en_us_publink1000172901
If you must make any payments in cash or property after your spouse's death as a substitute for continuing otherwise qualifying payments before the death, the otherwise qualifying payments are not alimony. To the extent that your payments begin, accelerate, or increase because of the death of your spouse, otherwise qualifying payments you made may be treated as payments that were not alimony. Whether or not such payments will be treated as not alimony depends on all the facts and circumstances. taxmap/pub17/p17-095.htm#en_us_publink1000172902
Under your divorce decree, you must pay your former spouse $30,000 annually. The payments will stop at the end of 6 years or upon your former spouse's death, if earlier.
Your former spouse has custody of your minor children. The decree provides that if any child is still a minor at your spouse's death, you must pay $10,000 annually to a trust until the youngest child reaches the age of majority. The trust income and corpus (principal) are to be used for your children's benefit.
These facts indicate that the payments to be made after your former spouse's death are a substitute for $10,000 of the $30,000 annual payments. Of each of the $30,000 annual payments, $10,000 is not alimony.taxmap/pub17/p17-095.htm#en_us_publink1000172903
Under your divorce decree, you must pay your former spouse $30,000 annually. The payments will stop at the end of 15 years or upon your former spouse's death, if earlier. The decree provides that if your former spouse dies before the end of the 15-year period, you must pay the estate the difference between $450,000 ($30,000 × 15) and the total amount paid up to that time. For example, if your spouse dies at the end of the tenth year, you must pay the estate $150,000 ($450,000 − $300,000).
These facts indicate that the lump-sum payment to be made after your former spouse's death is a substitute for the full amount of the $30,000 annual payments. None of the annual payments are alimony. The result would be the same if the payment required at death were to be discounted by an appropriate interest factor to account for the prepayment.taxmap/pub17/p17-095.htm#en_us_publink1000172904
A payment that is specifically designated as child support or treated as specifically designated as child support under your divorce or separation instrument is not alimony. The amount of child support may vary over time. Child support payments are not deductible by the payer and are not taxable to the recipient. taxmap/pub17/p17-095.htm#en_us_publink1000172905
A payment will be treated as specifically designated as child support to the extent that the payment is reduced either:
- On the happening of a contingency relating to your child, or
- At a time that can be clearly associated with the contingency.
A payment may be treated as specifically designated as child support even if other separate payments are specifically designated as child support.
A contingency relates to your child if it depends on any event relating to that child. It does not matter whether the event is certain or likely to occur. Events relating to your child include the child's:
- Becoming employed,
- Leaving the household,
- Leaving school,
- Marrying, or
- Reaching a specified age or income level.
Payments that would otherwise qualify as alimony are presumed to be reduced at a time clearly associated with the happening of a contingency relating to your child only in the following situations.
- The payments are to be reduced not more than 6 months before or after the date the child will reach 18, 21, or local age of majority.
- The payments are to be reduced on two or more occasions that occur not more than 1 year before or after a different one of your children reaches a certain age from 18 to 24. This certain age must be the same for each child, but need not be a whole number of years.
In all other situations, reductions in payments are not treated as clearly associated with the happening of a contingency relating to your child.
Either you or the IRS can overcome the presumption in the two situations just described. This is done by showing that the time at which the payments are to be reduced was determined independently of any contingencies relating to your children. For example, if you can show that the period of alimony payments is customary in the local jurisdiction, such as a period equal to one-half of the duration of the marriage, you can overcome the presumption and may be able to treat the amount as alimony.