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Mark Abzug

Tax implications can affect how you handle alimony

On Behalf of | Jan 29, 2015 | Alimony

Last week, we discussed some of the factors that are considered in Florida when it comes to alimony cases. While many people might think that alimony payments are great for the person receiving and not so great for the person paying, that isn’t always the case. There are some specific tax considerations for you to think about if you are in the midst of a case involving alimony.

Generally, the person who receives the alimony payments will have to pay taxes on court-ordered payments. This allows the person who is paying the alimony to deduct those payments when filing taxes. It is important to note here, however, that the spousal support being paid must be court ordered. Voluntary payments likely won’t be deductible.

In order for the support to be deductible, you can’t file taxes with your former spouse, the payments must be made in cash, and they can’t be classified as child support. There is never an instance in which support payments classified as child support payments are deductible.

As we stated earlier, the payments for spousal support must be made in cash. This means that items such as assets and property that are given to a spouse aren’t deductible.

With all of that in mind, it is necessary for the recipient of spousal support to claim those payments on his or her income taxes. Failing to do so can lead to penalties.

As you can see, there are various considerations when you are in the midst of an alimony case. Understanding those points can help you to decide how to proceed with your alimony case.

Source: FindLaw, “Alimony and Taxes” accessed Jan. 30, 2015