Alimony is a payment to or for a spouse or former spouse under a:
- Divorce or
- Separation agreement.
A 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
- Interlocutory decree, and
- Decree of alimony.
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
- Must be included in Massachusetts gross income.
A deduction is allowed for the total amount paid to a former spouse during the taxable year for alimony or separate maintenance under a court decree.
Child support payments don't qualify as an alimony deduction. Amounts aren't deductible by the payer and aren't included in Massachusetts gross income by the recipient.
In most cases, there isn't 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 3 years decline by more than $15,000.
Reporting on your tax forms
The amounts are included on the tax returns as follows:
- The payor includes the excess amount in his/her gross income by:
- In line 11 of the Form1040: cross out the word "received" and write the word "recapture"
- Cross out and write the same on the Massachusetts Form 1, Schedule X, line 1.
- The payee spouse takes a deduction for the recaptured amount by:
- In line 31a of the Form1040: cross out the word "paid" and write the word "recapture".
- Cross out and write the same on the Massachusetts Form 1, Schedule Y, line 3.
The deductible payment made in the first year is recaptured (reported as income) in the third year since the payment within the first 3 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
- 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 aren’t taxed on alimony, or separate maintenance payments received.
- 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,
This deduction must be prorated based on the amount of taxpayer's Massachusetts sourced gross income to Massachusetts gross income derived from all sources as if the taxpayer were a full year Massachusetts resident.
Submitting an abatement or amended return
If you're submitting an abatement or amended return, you'll need to submit a copy of:
- U.S. Form 1040, Lines 31a, 31b.
- 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 January 1, 1987.