, Enrolled AgentTaxPro Moderator
The publication you have identified spells out the conditions under which you can deduct a payment as alimony. However, since you mentioned that your payments are for 36 months (3 years), you may want to consider the IRS' alimony recapture rules that may impact you. Recapture rules determine if some of your deductions for alimony may be recaptured (taken back or added back to your income) by the IRS in the 3rd year of your payments.
The recapture rules state:
If your alimony payments decrease or end during the first 3 calendar years, you may be subject to the recapture rule. If you are subject to this rule, you have to include in income in the third year part of the alimony payments you previously deducted. Your spouse can deduct in the third year part of the alimony payments he or she previously included in income.
To figure the amount that may be recaptured, use the worksheet on page 18 of Publication 504.
When to apply the recapture rule.
You are subject to the recapture rule in the third year if the alimony you pay in the third year:
Decreases by more than $15,000 from the second year
Or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year.
When you figure a decrease in alimony, do not include the following amounts.
Payments made under a temporary support orders
Payments required over a period of at least 3 calendar years that vary because they are a fixed part of your income from a business or property, or from compensation for employment or self-employment.
Payments that decrease because of the death of either spouse or the remarriage of the spouse receiving the payments before the end of the third year.
- Payments must be in cash (includes checks and money orders). Cash payments to a third party under the divorce or separation instrument are considered alimony if they otherwise qualify
- Payments must be required by a decree or written separation instrument.
- Decree may not designate the payment as “not alimony.”
- Spouses may not be members of the same household (if separated under a decree of divorce or separate maintenance).
- Payment may not be child support.
- Payer’s liability to make payments must cease upon death of the recipient.
- Parties may not file a joint return.
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