Are Alimony Payments Tax Deductible?
Alimony aka spousal support that is paid by one spouse in the form of financial support to the other for spousal maintenance. The purpose of spousal support is to financially help the other parent maintain a certain standard of living after divorce.
Since alimony payments are considered to be a form of income, it is tax deductible. However, there are many requirements without which tax cannot be deducted from alimony payments.
The paying spouse is entitled to tax deductions for payment of spousal support
The IRS allows the one who is paying for alimony to deduct such payments from his or her taxes. The recipient must also show the payments as a source of income. Tax deductions help both spouses save money and the IRS too can keep a track of the alimony being paid. It helps as supporting evidence when disparities in alimony payments take place. In some cases, it also helps spouses maintain a good relationship with each other which is important when children are involved.
Issues regarding spousal support and taxes
There are certain requirements without which alimony taxes cannot be applied.
- During a divorce agreement, the alimony must be clearly mentioned. If nothing of this sort is mentioned in the agreement, then neither parent is responsible for paying any amount of money to the other parent.
- Couples usually have to live separately at the time of alimony payments.
Alimony is an important part of divorce and both the paying and receiving spouse should be aware of how taxes get deducted from alimony. It helps save money and protects spouses from doing anything illegal. Also, unfair alimony provisions are also prevented. Since, tax deductions mostly depend on the paying spouse, keeping a good relationship helps. Alimonies are important and it helps one spouse maintain almost the same amount of lifestyle as the other spouse.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.