Alimony or “maintenance” as it is officially known under Illinois Divorce Law, is a payment made to support one’s spouse after a divorce or separation. It is treated differently than a property settlement or child support for tax purposes, since alimony will be deductible on the payor’s income taxes, and it will be taxable income to the spouse receiving the payment.
Since divorce frequently leads to financial hardship on the part of one or both of the parties, it seems important that, if a divorcing couple wants to preserve a certain tax treatment, they should make sure they include the appropriate terms in their divorce agreement or judgment.
To receive the proper tax treatment alimony must be cash payments made under a legal divorce or separation instrument, such as a binding divorce or separation agreement, a divorce or separation judgment or a temporary support order. Also the payments must end at the death of the spouse receiving the payments.
While there is no requirement for how long alimony payments must run, the tax deductible portion will be reduced, if the payments decline too quickly during the first three years.
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