Many Payments Can
Qualify for Alimony Deduction
Payments Made on Behalf of an Ex-spouse May be Deductible
as Alimony
Watch out for missed alimony deductions. Some payments made to
third parties on behalf of an ex-spouse may qualify as alimony and be tax
deductible.
If you must make all the mortgage payments on a jointly owned home
where your former spouse lives, you may be able to deduct one-half of the
total payments as alimony and the other half on Schedule A as an itemized
deduction. The same is true for real estate taxes and insurance paid on
the home.
If you are legally required to pay any medical expenses for your
ex-spouse, you may be able to take the alimony deduction for those
expenses instead of on Schedule A as an itemized deduction. Since
medical expenses must exceed 7.5% of your adjusted gross income before
generating any deduction, the alimony deduction on page one of the Form
1040 is more valuable.
The divorce decree (or decree of separate maintenance prior to
finalization of a divorce) usually is the determining document regarding
what is alimony and what is not. If you will be making any of the
above payments, ask your attorney to have those payments specifically
designated as alimony in the court decree.
