Alimony—no one seems happy about the prospect of having to pay. As such, spousal support can be one of the most contentious aspects of getting a divorce. One way to soften your perspective about paying alimony is to learn about any possible benefits that might come your way if you do end shouldering this financial responsibility.
Guess what? Alimony is tax deductible. Many New Jersey residents do not know about this important fact. Even better, paying alimony could provide you with a sizable reduction in your taxable income. However, your situation must meet a few requirements as defined by the Internal Revenue Service. These requirements include:
- Spousal support payments must be identified as alimony within the divorce decree of the written separation agreement.
- Alimony payments must be made in cash, checks or money orders.
- Both spouses must file separate income tax returns.
- Alimony payments are not treated or used as equitable property distribution or child support.
- If the couple is legally separated, they must not share the same household at the time the payments are made.
- The payments will cease if the recipient spouse dies.
The above section should help the paying spouse cope better with the prospect of alimony. When spouses have been warring over alimony, the potential receiving spouse might want to make sure his or her ex knows about the tax benefits of paying alimony. This could go a long way towards bringing peace to the table and making sure all parties’ financial needs are met.
Whether you are a recipient spouse or a payor spouse, you might consider discussing the issues in depth with a family law attorney serving the Hackensack, New Jersey, community.
Source: IRS.gov, “Topic 452 – Alimony Paid,” accessed Jan. 20, 2016