Spousal Support is Tax Deductible for the Payer - Feinberg & Waller
"You know a lot of people come to me as a spousal support attorney in Los Angeles and Ventura County and they express an awful lot of concern about the fact that they are going to have to be paying spousal support. One of the biggest questions I get is spousal support taxable? And obviously, the people who receive the support are very worried about that and the people paying the support are also worried about the taxability of spousal support because they are looking for a positive side to that. In fact, spousal support is deductible, it is tax-deductible. It is a lot like when you buy a home and your mortgage insurance is tax-deductible. The government is doing that for a reason. They want you to buy homes to stimulate the economy so they are giving you a benefit to actually paying your mortgage. The government also has a plan with regard to spousal support, sometimes called alimony. They want the spousal support to be paid because it is an important component in helping broken families get back on track, so they want to incentivize the person paying the money so that they actually pay it. So they give them a break, they let them deduct it from their taxes. Now the recipient does has to pay tax on that money as income, but that is actually a good thing as well because in the context of the cash flow and in the context of their family, there has to be black and white, a yin and a yang. If taxes are being deducted, someone is paying tax on that fund.
Overall the concept of spousal support are two-fold, you have temporary spousal support and permanent spousal support, sometimes called long-term spousal support. They serve two different functions. Temporary support is simply to maintain the status quo while the divorce is going on. Long-term or permanent support is designed to rehabilitate, to help get the supporting party back on their feet and get them back to seld-supporting and both of those are tax-deductible and tax includable. It is all part of a very large system designed by the legislature to make this transition as something that is as painless as possible for everybody. You can deduct 100 percent of the spousal support that you pay, subject to some modifications due to very very high amounts, which have slightly different rules. You know, sometimes people come to me as a Los Angeles County divorce attorney and they say I am working on my third divorce and none of my ex-spouses have become remarried. I am paying alimony to spouse number 1, I am paying alimony to spouse number 2, do I still get to deduct the alimony that I am going to be paying to spouse number 3? The answer to that question is yes, all of it.
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