Spousal Support and Taxes: Things to Know

Spousal Support and Taxes: Things to Know

If you are paying alimony to an ex-spouse, chances are that it will affect your taxes. Spousal support carries a number of tax implications. It can be either taxable or tax-deductible, depending on whether you are the recipient or the receiver. It is important to keep in mind that if you pay spousal support, it is generally tax deductible. This is if certain requirements are met. The same does not hold true for child support or property distributions.

Certain types of payments involving an ex-spouse aren't fully deductible. If you and your ex share the costs of a home, you can only deduct half of the mortgage payment as spousal support. You will want to talk with a tax professional if you are confused about your spousal support payments and what is deductible. With the right attorney there to help you, you will be able to negotiate through these expenses and determine what you can deduct.

If you receive spousal support from an ex-spouse, this is normally considered taxable income. This means that you will probably have to pay taxes on these payments. Also, if your spouse makes payments to third parties on your behalf, these transactions are also taxable. If you are a stay-at-home parent, then you may need to soften the tax blow by paying the estimated taxes each quarter to the IRS and to your state. If you are working, you can increase the amount automatically withheld from your paychecks to cover these costs.

When organizing your finances for tax purposes, keep in mind that not all payments in a divorce decree are considered alimony. Child support, non-cash property settlements, payments that are a part of your spouse's community property income, and payments to keep up the payer's property or the use of the payer's property may not be taxable. You will want to look at each payment and determine whether or not it meets certain requirements to allow it to be deductible, taxable, or affect your taxes. It is best to make sure you have a tax attorney so that you do not get in trouble with the law for a miscommunication. Hire the firm today to learn more!