Paying alimony? Be sure to check the language in your divorce agreement. The instrument can’t say the amount is nondeductible. Two taxpayers who were required to make payments to ex-spouses learned this lesson the hard way.
IRS nixed the write-off in a private ruling when a divorce decree clearly stated that a lump sum payment was tax-free to the payee and nondeductible by the payer.
A poorly drafted agreement cost an ex-husband an alimony deduction. One exhibit to the document said that alimony required to be paid by the ex-husband was deductible by him and taxable to the wife. Another exhibit provided for the parties to treat payments as non-alimony and specifically referenced the applicable section of the federal tax code. The Tax Court decided the more definitive language controls in this instance and denied the alimony deduction (Quintal, TC Summ. Op. 2017-3).