Getting divorced in Ft. Lauderdale can be stressful, but there might be one silver lining available for the payer of a spousal support award. Alimony payments may be deductible on federal income tax filings if specific requirements are met.
The key to receiving this tax break is to follow all tax law details when arranging for the divorce. The payments made will have to follow the written agreement. Alimony payments will need to be paid directly to the ex-spouse and not in the form of bill or loan payments to a company or lender. The payments should be made in cash form or what qualifies as an equivalent. Child support does not suffice and will not be considered alimony for tax purposes. In addition, the agreement must make it clear that the payments are to be known specifically as alimony. The two parties, when divorced or separated, must not live together in the same home and should not file a joint tax return.
One of the most common causes of ineligibility is failing to outline directions that stop payments of alimony immediately upon the death of the ex-spouse. Another thing to keep in mind is that the spouse receiving alimony payments will most likely have to pay income tax on the payments.
When an ex-spouse receives court-awarded spousal support, the news may not be as negative when the divorce attorney has pointed out the tax break for the paying spouse that goes with it. The wording must be very specific, however, and that is where a lawyer might be helpful. There isn't always a bright side to divorce, but this is one positive aspect that the government tax structure allows.
Source: Market Watch, "There is one tax break for divorcees", Bill Bischoff, December 16, 2013