When couples divorce in Tennessee, one spouse may need to pay the other person alimony. This tends to happen if one person earns significantly more than the other, or if one spouse earns nothing at all. This may be the case when the wife or husband sets aside their career pursuits to raise a family and take care of the home. 

New tax reforms have added friction to alimony payments by removing the tax-deductible status for those who pay. What some payers may also not know is that there are certain instances that might cause their intended spousal support payments to not be counted as spousal support at all, especially for federal tax purposes. 

Here are some of the requirements the IRS puts in place for alimony to count as alimony for federal tax purposes: 

  • The payment must be made in cash or equivalent, such as money orders or checks. 
  • When payments are made, the spouses are legally separated either by divorce or separate maintenance decrees. 
  • The payments do not form part of a property settlement or child support. 
  • The spouses or ex-spouses cannot file a joint return together. 

There are also some perks offered to an ex that the IRS does not count as alimony. Some of these include property settlements not paid in cash, voluntary payments, the use of the payer’s property and payments meant for the upkeep of the used property. This may be great news for payer’s who want to come to an amicable solution with their spouses, but who do not wish to lump the full alimony in with their taxable income. 

That said, arriving at this type of arrangement may require a peaceful mediation and staying out of a courtroom. This is because judges in different areas have their own way of calculating mandatory cash alimony payments. Forbes says this is usually based on factors such as length of the marriage, lifestyle during the marriage and the needs of the payee.