Tax Consequences of Temporary Support

A divorce frequently takes months, and sometimes years, to resolve from the date of separation or filing until the divorce is final. Usually, the lower income spouse needs to receive support until the final decree occurs. Court-ordered spousal support payments that are made between the date of separation and the final decree are known as temporary support payments.

Temporary support payments qualify as taxable alimony (taxable to the recipient and deductible to the payor) only if they are paid because of a decree by a court. These decrees include interlocutory decrees and other decrees except final decrees of divorce or separate maintenance. Voluntary payments that have not been ordered by a court do not qualify as taxable alimony.

If the parties have not completed the divorce or become legally separated by December 31 of a particular year, they do not qualify as single for tax purposes and are still eligible to file a joint return. If they file a joint return for a year in which temporary support has been paid, the temporary support will not qualify as taxable alimony. Thus, for the alimony to be taxable their filing status must be married filing separately. If the divorce is final by December 31 of a year, the temporary support paid under a decree will be taxable to the recipient and deductible to the payor for the tax year. Temporary support payments that qualify as taxable alimony are not subject to the alimony recapture rules.

To qualify as taxable alimony, the temporary support payments must be made in cash or cash equivalents (i.e., checks or money orders payable on demand). Transfers of services or property will not qualify as alimony or separate maintenance payments. Likewise, a debt instrument for the benefit of the spouse receiving support or use by the receiving spouse of property does not qualify as alimony.

Payments to third parties can qualify as alimony. Payments by the provider of support for such expenses as a spouse’s rent, mortgage, taxes, or tuition qualify as alimony. However, payments of the mortgage, real estate taxes, or insurance on property owned by the provider of the support are not payments on behalf of the spouse and do not constitute taxable alimony even if they are made under a judge’s decree. Payments of premiums on whole or term life insurance on the provider’s life will qualify as alimony paid to the spouse only if the spouse is the owner of the policy. Payments by a provider of support to any third party under a written request, consent, or ratification by the receiving spouse also qualify as alimony.