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You Have Questions… Is Spousal Support Tax Deductible? Is it Taxable? | Feinberg & Waller Video Transcript
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 over the fact that they are going to have to be paying spousal support. And one of the biggest questions I get is “is spousal support taxable?” And obviously the people that receive the support are very worried about that. The people who are paying the support are also very worried about the taxability of spousal support because they’re looking for a positive side to that, and in fact, spousal support is deductible, it’s tax deductible. It’s 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’re 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 of helping broken families get back on track. So they want to incentivize the person paying the money to actually pay it, so they give them a break and let them deduct it from their taxes. Now the recipient does have 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 a black and a white; there has to be a yin and a yang. And if taxes are being deducted, somebody is paying tax on that fund. Overall, the concepts 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 supported party back on their feet and back to being self-supporting. And both of those are tax-deductible and tax-includable. It’s all part of a very large scheme and system designed by the legislature to make this transition something that is as painless as possible for everybody concerned.
You can deduct 100 percent of the amount of spousal support that you are paying, subject to some modifications dealing with 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’m working on my third divorce and none of my ex-spouses have become remarried. I’m paying alimony to spouse #1, I’m paying alimony to spouse #2, do I still get to deduct the alimony that I’m going to be paying for spouse #3?” And the answer to that question is, “yes you do; you can deduct all of it.”