Alimony and the IRS
Alimony payments can take a serious chunk out of your annual income. If you are handing over a substantial amount of cash, you should be able to deduct it for your taxes. In order to make your alimony payments tax deductible, however, there are seven rules you must follow.
If you need legal assistance negotiating alimony payments or child custody, contact the Denton divorce lawyers at the family law firm of Alexander & Associates today. Our team of compassionate attorneys will help you decide what is best for you and your loved ones. Call 972-420-6560 today to schedule a free initial consultation.
Rules for Deducting Alimony
In order to legally deduct your alimony payments from your taxes, you must adhere to the seven rules of the IRS regarding alimony.
- Payments must be in the form of cash or check
- Payment amounts and due dates must be documented in a marital settlement agreement, separation agreement, court order, or divorce judgment
- The divorce document must include a clause that says alimony is deductible by the payor and taxable to the recipient.
- You cannot be living with your ex-spouse
- Include a clause in your divorce agreement that states alimony may be terminated in the event the payor or recipient dies. Additionally, you may want to discuss termination if the recipient remarries.
- Clearly distinguish alimony payments from child-related expenses, as the IRS considers child support payments nondeductible.
- Follow IRS rules regulating “front loading,” or paying excessive alimony to receive tax breaks.
Deducting your alimony payments can save you a substantial amount of money on taxes.
For assistance with alimony payments and other divorce agreement issues, contact the Denton divorce lawyers at the family law firm of Alexander & Associates today by calling 972-420-6560.
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