Tax ramifications of Massachusetts alimony payments

The deadlines for filing state and federal tax returns are looming. Many Massachusetts residents have already filed their returns. For those who have yet to do so, the website for the Massachusetts Department of Revenue offers taxpayers the rules regarding alimony or spousal support payments as income paid or received by state residents.

As defined by law, alimony payments can be deducted from the payer's gross yearly income. They must be included in the recipient's gross annual income and declared to the federal government and the state of Massachusetts. Payments must either be made periodically in a predetermined sum or made for a fixed time frame in an undetermined amount.

Child support payments are not considered alimony and may not be deducted or counted as income. There are alimony recapture provisions in the state that align with the federal Internal Revenue Code that prevent marital property settlements from being treated as alimony payments.

These financial obligations to a former spouse can create a complex tax situation and have the potential to land Massachusetts residents in serious trouble if not handled correctly on tax returns. Tax preparers should be provided with court decrees regarding spousal support payments to document the veracity of the claims on the tax returns and lessen the chance of an audit occurring.

If you paid a former spouse alimony during the last tax year or if you were the recipient of alimony payments and have questions regarding the information to include on your tax return, discuss your concerns with your family law attorney or tax preparation professional.

Source: Massachusetts Department of Revenue, "Alimony Paid" accessed Mar. 13, 2015