Spousal Support Question

[ToledoEd]

Have a client with pre 2018 divorce who is still paying spousal support. His question is the divorce judgment forces him to maintain a life insurance policy on himself with the exwife as the beneficiary. He wants to know why he can't claim the cost of the insurance as spousal support. My opinion is that it does not qualify, but I could see his argument and wondering if anyone else has any experience or expertise in this area.

[Rapid Robert]

See Pub 504.

"Life insurance premiums. Alimony includes premiums you must pay under your divorce or separation instrument for insurance on your life to the extent your spouse owns the policy."

So, there might be an issue if the spouse is merely the beneficiary but not the owner of the policy, but otherwise it would count.

[TAX4US]

The way it was explained to me is spouse must own it but other spouse pays it. Then count it. I believe this is what Rapid Robert said.

[New York Enrolled Agent]

Have a client with pre 2018 divorce who is still paying spousal support. His question is the divorce judgment forces him to maintain a life insurance policy on himself with the exwife as the beneficiary. He wants to know why he can't claim the cost of the insurance as spousal support. My opinion is that it does not qualify, but I could see his argument and wondering if anyone else has any experience or expertise in this area.

Toledo - here is the official IRS answer. Reg.§1.71-1T - emphasis added

Q-6 May payments of cash to a third party on behalf of a spouse qualify as alimony or separate maintenance payments if the payments are pursuant to the terms of a divorce or separation instrument?

A-6 Yes. Assuming all other requirements are satisfied, a payment of cash by the payor spouse to a third party under the terms of the divorce or separation instrument will qualify as a payment of cash which is received "on behalf of a spouse". For example, cash payments of rent, mortgage, tax, or tuition liabilities of the payee spouse made under the terms of the divorce or separation instrument will qualify as alimony or separate maintenance payments. Any payments to maintain property owned by the payor spouse and used by the payee spouse (including mortgage payments, real estate taxes and insurance premiums) are not payments on behalf of a spouse even if those payments are made pursuant to the terms of the divorce or separation instrument. Premiums paid by the payor spouse for term or whole life insurance on the payor's life made under the terms of the divorce or separation instrument will qualify as payments on behalf of the payee spouse to the extent that the payee spouse is the owner of the policy.

[ToledoEd]

Thank you for the prompt and detailed replies. My client will be glad to hear this, Probably not the ex. Ed