Publication 17
Your Federal Income Tax

For Individuals

For use in preparing 2002 Returns

How To Deduct Alimony Paid

You can deduct alimony you paid, whether or not you itemize deductions on your return. You must file Form 1040. You cannot use Form 1040A or Form 1040EZ.

Enter the amount of alimony you paid on line 33a of Form 1040. In the space provided on line 33b, enter your spouse's social security number.

If you paid alimony to more than one person, enter the social security number of one of the recipients. Show the social security number and amount paid to each other recipient on an attached statement. Enter your total payments on line 33a.

If you do not provide your spouse's social security number, you may have to pay a $50 penalty and your deduction may be disallowed.

How To Report Alimony Received

Report alimony you received on line 11 of Form 1040. You cannot use Form 1040A or Form 1040EZ.

You must give the person who paid the alimony your social security number. If you do not, you may have to pay a $50 penalty.

Recapture Rule

If your alimony payments decrease or terminate during the first 3 calendar years, you may be subject to the recapture rule. If you are subject to this rule, you have to include in income in the third year part of the alimony payments you previously deducted. Your spouse can deduct in the third year part of the alimony payments he or she previously included in income.

The 3-year period starts with the first calendar year you make a payment qualifying as alimony under a decree of divorce or separate maintenance or a written separation agreement. Do not include any time in which payments were being made under temporary support orders. The second and third years are the next 2 calendar years, whether or not payments are made during those years.

The reasons for a reduction or termination of alimony payments that can require a recapture include:

• A change in your divorce or separation instrument,
• A failure to make timely payments,
• A reduction in your ability to provide support, or
• A reduction in your spouse's support needs.

When to apply the recapture rule.   You are subject to the recapture rule in the third year if the alimony you pay in the third year decreases by more than $15,000 from the second year or the alimony you pay in the second and third years decreases significantly from the alimony you pay in the first year.

When you figure a decrease in alimony, do not include the following amounts.

1. Payments made under a temporary support order.
2. Payments required over a period of at least 3 calendar years of a fixed part of your income from a business or property, or from compensation for employment or self-employment.
3. Payments that decrease because of the death of either spouse or the remarriage of the spouse receiving the payments.

Figuring the recapture.   For a blank worksheet for you to use to figure recaptured alimony, see Worksheet A in Publication 504.

Including the recapture in income.   If you must include a recapture amount in income, show it on Form 1040, line 11 (Alimony received). Cross out received and print recapture. On the dotted line next to the amount, enter your spouse's last name and social security number.

Deducting the recapture.   If you can deduct a recapture amount, show it on Form 1040, line 33a (Alimony paid). Cross out paid and print recapture. In the space provided, enter your spouse's social security number.

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