Tax Implications for Spousal Support in Illinois

 Posted on March 22, 2016 in Child Support

taxes, spousal support, Wheaton family lawyersApril 15 is just around the corner, and that means that it is almost time for everyone’s least favorite day of the year: tax day. While many people think that filing taxes is just a matter of reporting the income they earned from their job last year, income taxes can actually become quite a bit more complicated than that, especially if you have been ordered to pay, or are receiving spousal support.

Spousal Maintenance is Considered Income by the IRS

The IRS always considers spousal maintenance received to be income that must be reported when filing taxes. Any person receiving spousal maintenance must also provide their Social Security number to their former spouse as those who pay spousal support may count their payments as a deduction. The IRS uses Social Security numbers to determine who is eligible for the deduction and who must report spousal maintenance as income. Failing to include this information on a tax return may result in a $50 fine.

While it seems like a simple rule that spousal support is considered income, it actually does become a bit more complicated than that under current IRS regulations. The agency has a specific definition of what exactly is spousal maintenance. This means that the payment must be made at the direction of a court order and fit the following guidelines:

  • The former spouses must live in separate households and file separate tax returns;
  • The spousal maintenance must be in the form of cash, check, or money order. Any sort of property such as furniture or jewelry is not considered spousal maintenance, regardless of its value;
  • The spousal maintenance must be received by the former spouse or someone acting on his or her behalf;
  • The divorce decree must make clear that the payment is spousal support and not some other type of payment. In particular, the payment cannot be any form of child support or a payment intended to resolve a property dispute;
  • The spouse’s duty to render the spousal maintenance payment ends when the spouse receiving it dies; and
  • The payment must be for the amount ordered by the court. Anything paid over that may be income for the receiving spouse, but it would not tax-deductible for the paying spouse.

As long as the payment is in line with these rules, it is subject to the IRS’s regulations about spousal maintenance. One final important note is the reason the IRS is so clear about child support payments not being the same as alimony. That is because receiving child support does not count as taxable income that must be reported. In addition, making a child support payment is never an allowable deduction when filing income taxes. Neither party must report anything about child support payments to the IRS.

Contact an Experienced Attorney

If you are going through a divorce and are concerned about how to maintain your standard of living, an experienced attorney can help you understand spousal maintenance, as well as its tax consequences. Contact our compassionate DuPage County family law attorneys today to learn more about how we can be of assistance in your case.

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