Do I Pay Taxes if I Receive Alimony in Utah?

Ronald Reagan once said: “Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

His statement is kind of tragically funny because it’s true. So much of our everyday lives are taxed to the hilt.

This taxing, unfortunately, includes alimony. Yep, the goverment taxes alimony payments.

The government sees alimony as income, which makes a bit of sense when you think about it. If alimony weren’t paid out, it would count as income to the spouse who made the money. So, really, the tax payment is transferring from the spouse who pays alimony to the spouse who receives alimony.

Makes sense but still sucks because alimony (along with child support) is often the only source of income someone has after they get divorced. In any case, it is what it is.

What the IRS Says about Alimony and Taxes

The IRS has some guidelines about alimony and taxes (I’m going to quote from IRS Topic 452 — Alimony Paid). It sets out the requirements for something to be considered alimony:

“Amounts paid under divorce or separate maintenance decrees or written separation agreements entered into between you and your spouse or former spouse are considered alimony for federal tax purposes if:

  • You and your spouse or former spouse do not file a joint return with each other
  • You pay in cash (including checks or money orders)
  • The payment is received by (or on behalf of) your spouse or former spouse
  • The divorce or separate maintenance decree or written separation agreement does not say the payment is not alimony
  • If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the same household when you make the payment
  • You have no liability to make the payment (in cash or property) after the death of your spouse or former spouse, and
  • Your payment is not treated as child support or a property settlement”

And here are some things not considered alimony:

“Not all payments under a divorce or separation instrument are alimony. Alimony does not include:

  • Child support
  • Noncash property settlements
  • Payments that are your spouse’s part of community property income
  • Payments to keep up the payer’s property, or
  • Use of the payer’s property

Child support is never deductible. If your decree of divorce or separate maintenance provides for alimony and child support, and you pay less than the total required, the payments apply first to child support. Any remaining amount is considered alimony.

Noncash property settlements, whether in a lump sum or installments, do not qualify as alimony.

Voluntary payments (that is, payments not required by a divorce decree or separation instrument) do not qualify as alimony.”

How much you end up paying in tax on alimony received will depend on overall income at the end of the year. You’ll need to see an accountant to figure out exact numbers so you can plan.

Conclusion

In the end: (1) the person receiving alimony will pay taxes on alimony, (2) the person paying alimony will receive a tax deduction for alimony paid, (3) property settlements and child support are never considered alimony, and (4) you cannot change any of this by writing in your divorce decree that alimony will not be taxed (nice try, but the IRS doesn’t take too kindly to people trying to rewrite the tax code on their own).

Finally, if you would like to read more of what the IRS has to say on divorce and taxes, read here.

Protect Your Money And Your Family

We remove fear associated with divorce, protect your money & maximize time with your kids!

We're here to help. Let's determine your best options.

Call Us 24//7 at 801-685-9999 to Speak with a Live Representative

Utah Divorce FAQs
Top 100 Divorce Blog
What Clients Are Saying…
BrownLaw icon
Excellent
Brown Family Law
4.8
Based on 930 reviews
I absolutely believe that Brown Family Law is the best divorce attorney law firm in Utah. Attorney Ray Hingson did a fantastic job for me in a complicated divorce. He was there to guide me through the entire process. Ray touched base with me every week AND every time I called with worries or concerns. He handled things confidently and professionally. He took time to meet with me and explain everything so I could understand it. I felt like he really cared and wanted to do his best for me. His paralegal, Carren Leavitt, was also extremely helpful. All I had to do was pick up the phone and call her and she arranged a time for Ray to call me right back. She was always prompt and caring. I couldn't be happier!
Anne and Josh are Fantastic!!
I couldn’t have done it without Nathaniel Garrabrandt and the Brown Family Law truly the best experience and people to work with thank you!!
Brown Family Law is likely the most outstanding Family Law office in Utah. They care deeply about each client, responds quickly to every client question and concerns. If anyone is in a situation of divorce and/or child custody, I highly recommend this office to assist you with your rights. They stand firmly behind their clients.
Response from the owner:Thank you, Craig.
I can’t say enough good things about Clay Randle and Katrina Redd. They were both incredibly professional, responsive, and knowledgeable throughout my case. Their experience and advice were invaluable, and I truly appreciated their support every step of the way.
Daniel was patient, efficient, professional, and kind. Brown Family Law was easy to work with and very competent. Highly recommend.
Muchas gracias, professionales. Me ayudaron con mi caso, gracias.
Leilani Whitmer was my attorney for mediation day at the provo 4th district court on May 9th and absolutely knocked it out of the park. She made the process so smooth and easy I'd recommend her for any family law issue you could possibly fathom.
Clay Randle is absolutely amazing, well educated, knowledgeable lawyer. He’s approached, always makes sure you’re on the top of the situation and very helpful. I’ve had a pleasure working with him and I recommend him as your top notch attorney.
Brown Family Law has been wonderful to work with! Extremely knowledgeable and professional. Clay went the extra effort in everything he did for us. Couldn’t be more pleased!! I highly recommend their services.
yH5BAEAAAAALAAAAAABAAEAAAIBRAA7

Categories

Related Posts