Paying Taxes on Alimony
Many Americans going through divorce have questions about the tax ramifications of alimony payments.
Under US law, alimony is indeed taxable as income, and is included in the recipient's gross income.
That means that the spouse who receives the payments must list them on his or her income tax returns.
Not doing so is tax fraud, a serious offense.
However, the person paying the alimony is not required to pay taxes on the money, as this would amount to double taxation on a single payment of cash.
Additionally, this support money does not have to be included on the payer's gross income.
For example, if a man makes $150,000 a year and is required to pay $30,000 per year in alimony, he can list his gross income as $120,000.
Alimony payments can be listed as tax deductions.
What Is Alimony? This may lead you to ask, what, exactly, is alimony? Everyone knows that alimony is obligated spousal support payments.
The idea of alimony extends from the belief that spouses have an absolute obligation to one another, including financially, not just for the duration of the marriage, but for life.
Therefore, this obligation may not be ended by divorce.
But, on a legal level, there must be more stringent definitions of alimony.
The IRS has several definitions that define alimony by several qualifications.
They are:
Payments which are not required by the terms of the divorce are also not considered alimony.
Under US law, alimony is indeed taxable as income, and is included in the recipient's gross income.
That means that the spouse who receives the payments must list them on his or her income tax returns.
Not doing so is tax fraud, a serious offense.
However, the person paying the alimony is not required to pay taxes on the money, as this would amount to double taxation on a single payment of cash.
Additionally, this support money does not have to be included on the payer's gross income.
For example, if a man makes $150,000 a year and is required to pay $30,000 per year in alimony, he can list his gross income as $120,000.
Alimony payments can be listed as tax deductions.
What Is Alimony? This may lead you to ask, what, exactly, is alimony? Everyone knows that alimony is obligated spousal support payments.
The idea of alimony extends from the belief that spouses have an absolute obligation to one another, including financially, not just for the duration of the marriage, but for life.
Therefore, this obligation may not be ended by divorce.
But, on a legal level, there must be more stringent definitions of alimony.
The IRS has several definitions that define alimony by several qualifications.
They are:
- The spousal support payment must be made in cash.
That is, it must be monetary.
Non-cash payments such as homes or cars are not considered alimony. - Both former spouses must file separate tax returns.
- The payments are considered alimony as long as the divorce documents don't specifically define the payments as being something other than alimony.
That may sound confusing.
As long as the divorce documents don't make direct reference to such payments being something other than alimony, they are considered alimony. - The spouses don't share a residence.
They must live separately. - There is no obligation for one spouse to continue paying alimony after the death of the recipient of alimony payments.
Death ends the transaction. - Alimony payments are separate from child support payments, which have different rules surrounding them.
Payments which are not required by the terms of the divorce are also not considered alimony.
