Deduction of Payments to an Ex-Spouse as Alimony

To be deductible by the payor and taxable to the recipient, alimony payments must meet specific Code Section 71 requirements:

1. Writing: Payments must be made under a divorce or separation instrument. Oral agreements do not qualify.
2. Cash: Payments must be in cash (checks or money orders), not property or services.
3. Separate Households: The parties must not be members of the same household when payment is made (if legally separated).
4. Termination at Death: The liability to make payments must cease upon the death of the payee spouse.
5. No Child Support: Payments fixed as child support are not deductible alimony.

Common Pitfalls

Tax Court cases (like Murphy and Hill) emphasize that payments labeled "family support" that don't end at death or reductions tied to a child's age will not qualify as deductible alimony.