Are you recently divorced or separated from your spouse? You may find yourself dealing with alimony payments for the first time—and you’ll need to take those payments into account as you prepare your tax return. In general, alimony counts as taxable income for the recipient and may be deducted by the payer, as long as the two of you file separate tax returns.
For the IRS’s purposes, the following restrictions apply to alimony:
- Payments must be by decree related to a divorce or separation.
- Alimony must be in cash paid to the spouse, ex-spouse, or a third party on behalf of the spouse or ex-spouse.
- The payee and recipient must live apart after the decree.
- Payments cannot be designated as child support and cannot be contingent on the status of a child.
- Alimony ends with the death of the payee.
Want to learn more about how alimony payments affect your tax return? Get in touch with Taxation Solutions, Inc. today. We’re pleased to help taxpayers throughout the Memphis area navigate tough tax problems, including those that can result from a divorce or spousal separation.
Our job is to ease your burden and help you move forward on a firmer financial footing. Contact us today to get the answers you need!