- Nonresidents and Part-year Residents
- Where to Report on Original Tax Return; What to Enclose
- Documentation to Submit with Abatement/Amended Tax Return
- Massachusetts and Federal References
Alimony is payment to or for a spouse or former spouse under a divorce or separation agreement.
Divorce of Separation Instrument is one of the following:
- a decree of divorce or separate maintenance or a written instrument incident to that decree;
- a written separation agreement; or
- a decree or any type of court order requiring a spouse to make payments for the support or maintenance of the other spouse. This includes a temporary decree, an interlocutory decree, and a decree of alimony.
To qualify as alimony, the payments must be "periodic payments" which are either payments made in a fixed amount for an indefinite period, or payments made in an indefinite amount for a fixed period.
Alimony - Schedule X Income:
Since alimony is deductible from gross income by the payer, it is included in gross income by the collecting spouse or former spouse. Alimony received is included in federal gross income and therefore must be included in Massachusetts gross income.
Alimony - Schedule Y Deduction:
A deduction is allowed for total amount paid to a former spouse during the taxable year for alimony or separate maintenance under a court decree.
Child Support Payments do not qualify as an alimony deduction; amounts are not deductible by the payer and are not included in Massachusetts gross income by the recipient. In most cases, there is not enough money for alimony after payment of child support. In some circumstances, courts may award both alimony and child support payments.
Massachusetts follows the alimony recapture provisions of the Internal Revenue Code. The federal rules force a "recapture" of front-loaded alimony payments in year three of a divorce alimony agreement. These rules are designed to prevent property settlement payments from qualifying for alimony treatment.
Deductible payments made in the first or second year may be recaptured (reported as income by the payer) in the third year where payments within the first three years decline by more than $15,000.
The amounts are included on the tax returns as follows:
- The payor includes the excess amount in his/her gross income by crossing out in line 11 of the 1040, the word "received" and writing in the word "recapture"; The same is done on the Massachusetts return, Schedule X, line 1.
- The payee spouse takes a deduction for the recaptured amount by crossing out in line 31a of the 1040 the word "paid" and writing in the word "recapture". ". The same is done on the Massachusetts return, Schedule Y, line 3.
In 2009, taxpayer obtains a divorce and pays alimony of $50,000.
- tax year 2009: taxpayer claims alimony deduction of $50,000 and his ex-spouse reports alimony income of $50,000;
- tax years 2010 and 2011: the taxpayer makes no alimony payments;
- tax year 2011: taxpayer must recapture as income $35,000 of the 2009 deduction ($50,000 - $15,000) and his ex-spouse claims as a deduction $35,000.
The deductible payment made in the first year is recaptured (reported as income) in the third year since the payment within the first three years declined by more than $15,000 (from $50,000 to 0).
No Tax Status and Limited Income Credit Calculation:
This deduction impacts the calculation of No Tax Status and the Limited Income Credit as it is treated as an adjustment to arrive at Massachusetts adjusted gross income on the Massachusetts AGI Worksheet and Schedule NTS-L-NR/PY.
- The amount reported on U.S. Form 1040, Line 11 must be entered on either Mass Form 1 or 1-NR/PY, Schedule X, Line 1.
- Part-year residents are taxed on alimony or separate maintenance payments received as a Massachusetts resident.
- Nonresidents are not taxed on alimony or separate maintenance payments received.
For the deduction
- The amount reported on U.S. Form 1040, Line 31a must be entered on either Mass Form 1 or 1-NR/PY, Schedule Y, Line 3.
- Part-year residents should only include the amount of alimony paid while a Massachusetts resident.
- Nonresidents must multiply the amount of this deduction by Massachusetts Form 1-NR/PY, Line 14g, Nonresident Deduction And Exemption Ratio, since this deduction must be prorated based upon the amount of taxpayer's Massachusetts gross income (derived from sources within Massachusetts) to Massachusetts gross income derived from all sources, as if the taxpayer were a full year Massachusetts resident.
Documentation to Submit with Abatement/Amended Tax Return:
To show that the deduction was taken federally
- Copy of U.S. Form 1040, Lines 31a, 31b.
- M.G.L. Chapter 62, Sections 2(a), (d)(1)
- LR 85-38: Alimony and Child Support, Distinguished
- I.R.C. §§ 62(a)(10); 71, 71(f); 215 relating back to Section 62(a)(10)
- 1986 Tax Reform Act, P.L. 99-514, Section 1843(c)(1), with an effective date of 1/1/87