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A Voluntary Increase in Alimony Payments May Not Result In Tax Deduction

On Behalf of | May 26, 2017 | Divorce & Family

I have written numerous articles regarding the potential negative legal impact of not having a modification approved by the court.  Failure to have the court approve a modification may result in many negative consequences, including inability to enforce the agreement.

A recent decision from the tax court (Bulakites, TC Memo. 2017-79), the tax court denied a tax break on an oral agreement to increase alimony payments.  The divorce court provided that the ex-husband was required to pay $2,000.00 per month for alimony.  After the sale of the marital residence, the alimony payments were to increase to $8,000.00 per month.  Pending the sale of the house, the ex-husband orally agreed to increase the payments to $3,000.00 per month and then tried to deduct the additional $1,000.00 per month as alimony on his income tax return.  Finding that the additional alimony payments were not court ordered, as the oral agreement was not approved by the divorce court, the tax court ruled that the ex-husband could not deduct the extra alimony payments.  Accordingly, when faced with making modifications to a divorce decree, it is in your best interest to consult with an attorney and/or tax professional as to whatever obligations and requirements are needed to enforce the modification.

If you have any questions regarding a post-divorce or spousal support matter, contact an attorney at Hamblett & Kerrigan and put their experience to work for you.

Kevin P. Rauseo is a former director at Hamblett & Kerrigan P.A. and has since been appointed as a Justice for the New Hampshire Circuit Court.  Please feel free to contact another attorney at Hamblett & Kerrigan to discuss your legal issues.