Posts Tagged ‘alimony payments’

Is Alimony Taxable Or Non-Taxable?

Monday, April 2nd, 2018

Many spouses who find themselves paying spousal support want to know the tax implications that are applied. In short, spousal support must be reported as taxable income by the recipient, and can be deducted by the paying spouse. Do not confuse this with child support, as it is neither taxable nor is it deductible.

If there is an increase in tax for the spouse receiving the payments, it can usually be offset by the significant tax savings by the paying spouse, and at that point, if deemed necessary, they can make an additional payment to the receiving spouse to make up the difference. So in short, yes, alimony is taxable, although you can arrange for it to be both non-taxable as well as nondeductible, but that would have to be included in the marital settlement agreement.

If you are receiving alimony and haven’t arranged for it to be nontaxable and nondeductible, then you should plan for it to be taxed and prepare you finances accordingly. One way to do this is if you have a paying job, you can increase withholding from your paycheck, to offset any impact of support payments. Because the math can be a bit complex, you can check the potential tax liability at the IRS website. Some find it helpful to speak with a tax professional, as they can help you figure out the ideal amount for both you and your former spouse that is making support payments.

If you are the one making alimony payments, you can list the payments as deductible on your income tax return. The IRS will be paying close attention to support payments for the first 3 years, as some newly divorced people try to mask property allocation or other obligations that resulted from the divorce agreement. Also, keep in mind child support payments are not tax deductible, and if your spousal support is set to end when the children go to college, the IRS could consider the payments as child support instead of spousal, so for your protection, in the agreement, try not to have the alimony termination connected to the children in any way.

How Long Do You Have To Pay Spousal Support?

Saturday, October 22nd, 2016

Spousal support is common in many divorce cases and usually involves one spouse paying the other on a routine basis. For instance, there are many situations where one spouse is not working, and because he or she has been out of work for a period of time, the working spouse has to provide support.

Every state has different rules regarding the duration of spousal support, but in truth, there is no clear-cut way to go about determining how long spousal support lasts.

Spousal support, also called as alimony, is ordered by the court and is meant to be rehabilitative, in the sense that is will be in place as long as necessary for the receiving party until he or she becomes self-sufficient and self-supportive. It is not uncommon for the court to also set an exact time for when the spousal support expires or when payments are no longer necessary. If this does not happen, then payment must be continuously made until the court makes an order otherwise, or the paying spouse makes a motion to stop the payments.

Another possible element that could change the duration of spousal support is the personal life of either spouse. If the receiving spouse re-marry or has a live-in partner, the payments will most likely end. This could be true even if the amount paid up to that point is not enough to qualify as “rehabilitated.”

It is only on rare occasions that spousal support would be permanent, and that is only under a small umbrella of circumstances. The most common one is if the spouse that receives the support has health problems that would require them to have most, if not all of their costs covered.