As 2014 draws to a close, recent divorcees in Oklahoma may wonder what effect their divorce has on their taxes. One aspect of divorce that has tax effects is alimony. How does the payment and receipt of alimony affect one’s federal income taxes?

According to the Internal Revenue Service, for federal income tax purposes, alimony is considered taxable income for the receiving spouse and constitutes a tax deduction for the paying spouse. However, payments voluntarily made from one ex-spouse to the other that are not mandated by the couple’s divorce decree are not considered to be alimony for federal income tax purposes.

So what, according to the IRS, falls under the definition of alimony? Alimony must be documented by a divorce decree that specifically labels the payments as alimony. Money paid pursuant to a divorce decree is considered to be alimony if the couple does not file their federal income tax return jointly. In addition, the payments must be made by check, cash or money order and must be received by the other spouse. The spouses must not be residing in the same household when payments are being made. Furthermore, it must be ordered by the court that alimony payments will cease once the receiving spouse dies. Finally, any amount paid towards a property settlement or child support will not be considered alimony.

The link between alimony and income taxes is very important, as there could be consequences for failing to report it as income. This post should not be considered a substitute for legal advice, so Oklahomans with more questions about alimony and taxes may want to discuss their concerns with an attorney.