On behalf of Cooper & Tanis, P.C. posted in divorce on Monday, August 28, 2017.

When Colorado marriages end, one person could potentially be ordered to pay the former spouse alimony, especially if the other spouse stayed home to take care of the children. In some cases, those who are required to make alimony payments could treat these payments as tax-deductible, which could save them some money. Before this can be done, certain factors must be taken into account.

There are seven requirements that the alimony payments must meet in order for them to be deductible. First, the payments must be put in writing in the divorce or separation agreement. Second, the payments must be made directly to the ex-spouse or to third parties, such as an attorney, if it is written in the divorce agreement. Third, the obligation to make alimony payments must cease if the recipient dies.

The fourth and fifth requirements are that the alimony payments must be made in cash and that this payment is not considered to be child support. This sixth requirement states that the payments being made are called alimony or spousal support in the divorce agreement. Finally, once a former couple has gotten separated or divorced, they cannot live in the same home and they cannot file a joint Form 1040.

Going through a divorce can be not only an emotional process, but it can also have financial implications for both individuals. While child support is not tax-deductible, alimony may be tax-deductible for the person being ordered to make payments. A family law attorney can be of assistance in structuring an agreement in order to optimize the tax benefits.