Part Seven: The payment is not fixed as child support.
Alimony or separate maintenance payments are included in the gross income of the payee spouse and allowed as deduction from the gross income of the payor spouse.
A payment under a divorce or separation agreement executed or modified after 1984 qualifies as alimony if:
- An amount is fixed as payable for the support of the payor-spouse’s child under a divorce or separation instrument if the instrument specifically designates an amount of money or a part of the payment as payable for child support
- Child related contingency: A portion of a payment may constitute child support even when the instrument does not specifically designate it as fixed for that purpose. A payment under a divorce or separation instrument is treated as fixed if the payment is to be reduced on the happening of certain child related contingencies
- Event contingency: A specified contingency relates to a child if it depends on any event relating to that child, regardless of whether that event is certain or likely to occur.
- Attaining a specified age, marrying, dying, leaving school
- Attaining a specified income level, leaving the spouse’s household or gaining employment
- Time contingency: A payment is treated as reduced on the happening of a child-related contingency, even if not specifically stated to be tied to the event in the instrument, if it is reduced at a time clearly associated with the happening of a contingency relating to a child of the payor spouse. Payments that would otherwise qualify as alimony or separate maintenance payments are presumed to be reduced at a time clearly associated with the happening of a contingency relating to a child of the payor-spouse.
- When the payments are to be reduced not more than six months before or after the date the child is to attain the age of 18,21, or local age of majority; or
- When the payments are to be reduced on two or more occasions that occur not more than one year before or after a different child of that payor-spouse attains a certain age between the ages of 18 and 24, inclusive. This certain age must be the same for each child, but need not be a whole number of years.
- Rebuttable presumption: The presumption in the two situations described above may be rebutted by a showing, either by the Service or by taxpayers, that the spouses decided the time of the payment reduction independently of any child-related contingencies.
Two such examples come to mind.
- The first example would be a situation where the payee-spouse is moving to a smaller home after the children are emancipated. The smaller home may reduce the payee-spouse’s expenses which could reduce the amount of spousal maintenance.
- The second example would be a situation where the payee-spouse increases their employment income after the children are emancipated which could reduce the amount of spousal maintenance.