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What to know about taxes and alimony payments

As tax time approaches, many people in Mount Holly may be unsure about how their divorce will affect their tax return. Anyone who makes or receives alimony payments will need to report them to the Internal Revenue Service. Here is how alimony will affect a person’s tax status.

According to Yahoo, anyone who receives alimony payments will be responsible for paying taxes on the amount received. With some advance planning, tax payments can be set up to occur throughout the year. Alternatively, the total amount for the year will be due when the person’s tax return is filed.

Those making alimony payments, on the other hand, may be happy to learn that those amounts are tax deductible. It is important to note that this applies only to alimony payments and not to payments made as child support. In order to ensure that the payor receives full credit for their payments, he or she will need to make sure of a few things. For example, the ex-spouse’s social security number must be reported on the tax return so that the IRS can cross-reference the payments.

In addition, Forbes points out that a few different criteria must be met in order for the payments to qualify. For instance, the payments cannot be voluntarily; that is, they must come as the result of a divorce settlement or other written legal document. Alimony payments cannot be claimed if the ex-spouses still live together and they cannot be claimed if the parties were still married for part of the year and are filing a joint tax return.

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