Which statement best describes Deductible Alimony?

Deductible alimony refers to the payments that a person makes to their former spouse as a result of a divorce or separation agreement. For these payments to be considered deductible on the payer's tax return, they must meet certain criteria outlined by the IRS.

The correct statement is that deductible alimony must be specified in tax documentation. This means that the payment arrangement should be clearly outlined in the divorce decree or separation agreement. Additionally, the payer must report the payments as alimony on their tax return, and the recipient must claim the payments as income. This requirement for proper documentation ensures that both parties handle the tax implications correctly and comply with IRS regulations.

The other choices provided do not accurately describe the nature of deductible alimony. For instance, payments made anonymously do not meet the IRS's requirement for clear reporting and accountability. Payments made in service rather than cash would not qualify as alimony; the payments must be in cash or cash equivalents. As for dependency on employment status, while the ability to pay alimony may be influenced by one’s employment, the deductibility of such payments is not solely dependent on the payer's job status but rather on the terms of the divorce agreement and how payments are documented.