7 Requirements for Spousal Support

October 5th, 2016 Posted by  Dwayne and Caroline

7 Requirements for Spousal Support by Dwayne Grady & Caroline Girgis

{4:06 minutes to read} You and your spouse have finally agreed on spousal support. The amount, while not what you initially wanted, allows you to try and move on with your life. Everything is good, right? Maybe.

Let’s make sure. To be considered spousal support, the payments must meet all of the following requirements:

1. All payments must be made in cash, by check or money order.

A transfer of property or performing a service does not qualify as spousal support. However, if under the terms of a separation agreement one spouse must pay the mortgage, real estate taxes, and insurance premiums on a house owned solely by the ex-spouse, then the paying spouse can deduct these payments as spousal support. The spouse who owns the house must include the payments in their income, but if they itemize their deductions, they are entitled to claim the deductions on the real estate taxes and mortgage.

2.  There must be a written court order or separation agreement.

With no written agreement, it does not matter if one spouse sends the other monthly checks and the receiving spouse cashes those checks. Since there is no written agreement, the spouse sending the checks cannot deduct the payments as spousal support.

3. The divorcing couple must not opt out of spousal support treatment for federal income tax purposes.

Spousal support is taxable to the person who receives it and tax deductible by the person who pays it UNLESS they agree in the divorce decree that the spousal support would not be taxable.  

4. The divorced couple cannot be living in the same household unless it is for temporary spousal support.

If a couple gets divorced but still lives in the same home, and one spouse pays the other support—as specified in the divorce decree—the paying spouse cannot deduct it on their tax return. Since they live in the same home, it is not considered spousal support.

5. If the payee dies, the payments must stop.

Unless stipulated in the divorce decree, the spousal support obligation must terminate upon the death of either the payor or payee.

6. The couple cannot file a joint tax return.

This is a common mistake. Many couples file a joint tax return in the year their divorce becomes final. However, their filing status is determined by their marital status as of December 31st of the year they are filing. So, if they are divorced during the year 2016, on December 31, 2016, they are not married and therefore may not file a joint tax return.

7. No portion of the spousal maintenance can be considered child support.

This is a big no-no and often misunderstood. If spousal support is reduced six months either before or after the date when a child reaches the age of majority in his/her state (typically 18 or 21), the amount of reduction is considered child support and not spousal support. That means not only are the tax benefits negated, but there may also be recapture rules.

It’s the timing that changes spousal support to child support. The key is making sure that spousal support does not change within 6 months of child support ending, or it will be considered child support and therefore not deductible.


ANEW Divorce Planning
Dwayne Grady (CFP®, CLU®, ChFC®, CDFA™, MBA)
Caroline Girgis (JD, ChFC®, CDFA™)
1750 Tysons Boulevard Suite 1500, McLean, VA 22102
(703) 289–5041

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This entry was posted on Wednesday, October 5th, 2016 at 5:18 pm and is filed under Divorce.