If you pay alimony, one thing you have to consider is the impact it will have on your taxes. Alimony is treated as a type of income. Since you’re the one who will have to pay alimony, your ex-spouse needs to pay taxes on that income.
How do you know if you can deduct alimony from your taxes? There are a few requirements you need to meet. Here are a few.
First, you need to file your own tax return. You can’t take a deduction if you’re still filing with your ex-spouse. If you’re filing with your ex, you can’t take the deduction because you are both considering your incomes as one. In that case, the return needs to address the payment of alimony if you decide to claim it at all.
You must also pay in cash. That means using checks, money orders or cash to pay each alimony payment. Additionally, your payment must not be treated as child support. You may not live with your ex and take a deduction for alimony. Finally, if you have no liability to make a payment due to your former spouse’s death, you can’t take a deduction.
If you pay alimony as a part of a property settlement, it may not be recognized as alimony by the government and may be unable to be deducted. For instance, if you have a lump-sum settlement of $100,000 that includes $20,000 in alimony, the $20,000 may not be tax deductible.
These are a few things to consider about alimony. If you have concerns about your settlement or negotiations, your attorney can help.
Source: FindLaw, “Alimony and Taxes,” accessed Aug. 01, 2017