Alimony/Maintenance Payments

Alimony payments (also known as “Maintenance”) are made by one spouse to another, pursuant to a court decree to provide supplemental income to maintain the standard of living that the receiving spouse (i.e. obligee) experienced during the marriage. The payments may continue for a fixed period of time or for the life of the obligee spouse.

In Illinois maintenance will terminate upon the occurrence of any of the following events: (1) remarriage of the recipient/obligee; (2) death of the recipient; (3) death of the payor/obligor; or (4) recipient co-habits with another person on a continuing conjugal basis.

Alimony, or maintenance payments, are taxable income to the recipient spouse (obligee). The obligee reports maintenance as income on Form 1040, line 11. IRS Forms 1040A, 1040EZ, or 1040NR-EZ cannot report maintenance income. For the party making the maintenance payments, the taxpayer may deduct the alimony paid by entering the alimony paid on Form 1040, line 30a and enter the spouse/obligee SSN or ITIN on line 31b.

There are four conditions that must be met for payments to a spouse to be considered maintenance: (1) payments must be made pursuant to a court decree; (2) payments must be made in cash, and not in a transfer of property; (3) spouses must not live together; and obligation to make payments terminates upon the death of the recipient/obligee.

Payments to a person who was never legally a spouse cannot be treated as maintenance.

Child support payments are not deductible by the payor/obligor spouse and are not taxable income to the recipient/obligee spouse. Furthermore if maintenance payments may be reduced upon a contingency relating to a child such as reaching a certain age or income level, marries, attend school, attains employment, etc., then the payment will be deemed child support by the IRS.

Attorney fees incurred to receive maintenance up to 2% of adjustable gross income but the deduction of attorney fees is not allowed for determination of the alternative minimum tax.

If the alimony payments decrease or end during the first three years then the payments are subject to “recapture rules.” The three years start the first calendar year that the payments qualify as maintenance under a court decree, but temporary support orders are excluded. The second and third years are the next two calendar years regardless of whether payments are actually made.

Recapture means reported as income. For the payor/obligor, deductible maintenance payments made in the first or second year, are recaptured or reported as income, in the third year. Payments made in the first year are recaptured if they exceed the payments in the second year by $15,000.00. Payments made in the second year are recaptured if they exceed the payments made in the third year by $15,000.00.

Common reasons for a reduction in alimony payments are a change in the divorce or legal separation decree; failure by the obligor to make payments; reduction in ability of obligor to make payments; or a reduction in the recipient spouse’s support needs.

If the obligor must add back alimony (recapture) as income, show it on IRS Form 1040, line 11 entitled “alimony received” cross out received and write “recapture” and enter the recipient/obligee spouse’s SSN or ITIN and name on dotted line next to the amount. For the recipient spouse/obligee, deduct the recapture amount by writing in the amount on IRS Form 1040, line 31a entitled “alimony paid,” and cross out “paid” and write “recapture.”

For any questions or concerns, please feel free to contact the law office of Arlington Heights attorney Robert S. Thomas. 

LAW OFFICE OF ROBERT S THOMAS

1655 N Arlington Heights Rd, Suite 300West

Arlington Heights IL 60004

847-392-5893 phone
info@attorneyrobertthomas.com

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