An Ohio resident might pay support to a former spouse after a divorce. Most of the time, spousal support is tax deductible by the payer and taxable to the recipient. However, after a man tried to deduct a payment based on an agreement with his wife, the U.S. Tax Court found that spousal support must be specifically mentioned in a legally binding divorce or separation agreement in order to be deductible
The man had been paid a bonus in 2006, and he and his spouse divorced the following year. The two signed an agreement about the portion of the bonus the man would pay his spouse. The agreement also specified that the bonus would be reported in full on his taxes. Later, a spousal support order specified that he would pay $3,270 monthly and a percentage of his income when he earned more than $12,500 in a month. However, the agreement did not make any reference to the split of the bonus.
There are several other factors that must be in place for spousal support to be tax deductible. The separation or divorce agreement must not say that the support is nontaxable or nondeductible. The payments must come to an end on the recipient's death, and the two people must not be living in the same household when the payments are made.
A divorce can have a negative effect on a person's financial situation, and people who have not worked outside the home may be concerned about receiving support. The support may be critical as they train for the workforce. People paying support may worry about how they will afford the cost. In some cases, support may only be temporary. An attorney may be able to explain how support is likely to be calculated and assist in negotiations regarding it.