What Does Not Qualify As Alimony Payments For Tax Deductibility

Today, we’re talking about alimony and spousal support in California. And specifically this video is about what types of payments do not qualify as alimony.

Doing a series of videos where I found a publication put up by the Franchise Tax Board that’s talking about somebody’s specifics.

They’re interesting because they go the effective tax as opposed to you know what it is necessarily but how certain items of spousal support and alimony and what alimony is considered to be and what they’re not.

And this particular and types of alimony payments that do not qualify as alimony and the reason that’s important because alimony payments are tax deductible.

So if it’s established in a different way it wouldn’t be tax deductible. And I want to give you what the Franchise Tax Board is saying would not qualify as alimony therefore would not be tax deductible.

Property settlement payments even if required by the divorce to clear other instrument will agree.

So this is just a distribution of property. Let’s say you guys split up an assets sold the house and so forth that from written this that perhaps would not be considered alimony.

Of course, you don’t want to talk to tax advisors talk to an attorney about the specifics of this.

We’re not giving tax advice or legal advice. We’re just trying to get these informations out there more easily readable and findable way.

Retirement benefits that the other spouse’s entitled to received based on division of a community property.

Okay so what that I’m referring to is if let’s say the working spouse we have two spouses one that’s working, one is not working.

The one whose working let’s say they have created a $100,000 pension. The pension because it’s community property according to the Franchise Tax Board would be divided.

Let’s say they’re married 10 years. They’re in the pension system 10 years so it can be divided 50-50.

That’s $50,000 that, that spouse would receive as a distribution from this community property asset would not be considered alimony.

It will just be a division of a community asset. So that $50,000 wouldn’t be tax deductible and it wouldn’t be counted as alimony for the Franchise Tax Board.

Any voluntary payments made before they are required by Divorce Decree or written agreement.

I will read that again, any voluntary payments made before they are required by a Divorce Decree or written agreement.

So this is interesting. I made you a separate video all together on these.

So without a court order there is no order. Therefore you can’t get the benefit of the alimony.

So if you are going through divorce and you are you set let’s say you’ve separated and you’re living in a separate residence but you’re giving your spouse money on a monthly basis which a lot of people do.

And it’s recommended of course for variety of reasons but not the topic of this discussion.

Any money you’re giving your spouse, so, let’s say you’re separated, you’re giving your spouse a $1,000 a week or $4,000 a month you cannot get a credit for that.

So you can’t deduct that off your taxes at the end of the tax year because there’s no court order. You need to get what’s called a temporary order.

So you’ll have a court order so from this date forward you’re paying these much you can always amend that in the final judgment but you’re not going to get accredit for those nor you’ll be able to deduct that.

So the benefit or the idea would be to get a temporary order as soon as possible. So it is tax advantageous to you.

And I am going to do a separate video right after this one that talks specifically about that because it’s very important.

And then the last one they have here is child support payments. Child support payments are not alimony.

Obviously, they’re not spousal support. And they’re also not tax deductible nor does the other party receiving it have to claim it is as income.

Tim Blankenship with Divorce661.com, we specialize in California Divorce. I hope this information was helpful.

Please call us if you like us to help you with your divorce in California. We work out flat fee pricing.

I’d be happy to take care of that for you. The number is 661-281-0266.

Feel free to give me a call for a free consultation.