Ted earned $150,000 during the current year.He paid Alice,his former wife,$75,000 in alimony.The $75,000 payment reduces Ted's AGI and increases Alice's AGI.

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Alimony payments are deductible for the payer and taxable for the recipient. Therefore, Ted can deduct the $75,000 alimony payment, which reduces his adjusted gross income (AGI), and Alice must include it in her income, which increases her AGI.

Ted Earned $150,000 During the Current Year