Are You Getting Divorced? Know the Rules of Alimony
By Taxation Solutions, Inc. on 2015-10-30
Alimony, or spousal support, is often paid to an ex-spouse upon the official decree of divorce. It is only paid when the divorced spouses are living separately. Whether you're the spouse paying alimony or the spouse receiving alimony, it's important to know the rules so you don't face any trouble during tax season.
First and foremost, if you're receiving spousal support, you need to know that alimony counts as taxable income. You'll need to report it when you file your taxes every year. On the other hand, if you're the spouse paying the alimony, you may deduct these payments on your tax returns annually. However, these tax rules only apply if you're filing taxes separately.
When paying alimony, your payments must be made in cash (i.e. not on credit). Spousal support payments must also be kept separate from any child support payments being made. In fact, as spousal support is explicitly for the benefit of the spouse, alimony status may not be conditional on the existence of a child at all. Whether or not you have children should not have any effect on alimony payments. Finally, spousal support payments are discontinued upon the death of the payee.
If you have any questions about alimony payments and what they mean for your finances or your taxes, don't hesitate to contact the professionals at Taxation Solutions, Inc. We're here to help Arlington-area residents by providing practical advice for a variety of tax problems. Call or e-mail us today to learn more!