Divorce and Taxes: Alimony Can Be Deducted on Your Filing
One major life event that has an impact on your taxes is divorce. When you and your spouse decide it is time to file for a divorce, your past tax filings and your taxes in general will be under a microscope. Even some of the specific elements to a divorce have a huge impact on your taxes — not just the divorce in general.
In this regard, we bring up the topic of alimony and taxes. Alimony is awarded in some divorces, granting one spouse financial compensation in the form of payments from the other spouse. this is usually awarded due to a financial imbalance brought about by the divorce, or to maintain a standard of living for one of the spouses in the wake of the divorce.
So how does alimony relate to taxes? Well, the paying spouse can actually use his or her alimony payments as a deduction on their taxes. This can be incredibly helpful come tax time. Alternatively, the spouse that receives alimony payments must include them in their income on their tax filing.
Now, it is important to note that many other financial aspects to divorce don’t necessarily allow the payer to deduct. Child support payments, for example, can’t be deducted on your taxes. Additionally, property, lump-sum and cash settlements relating to your divorce can’t be deducted on your taxes. If you have questions about tax filings and the many factors that are involved in a divorce, please consult with an attorney as soon as possible.
Source: FindLaw, “Alimony and Taxes,” Accessed Dec. 11, 2015
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