Over 50% of marriages end in divorce within the United States. A lot of divorce decrees incorporate provisions for the payment of alimony. The IRS takes the position that such payments constitute a form of income and make an alimony tax deduction for the individual creating payments.
According to the IRS, alimony payments are taxable to the recipient within the year received. In turn, the individual paying the alimony can claim a deduction for the payments if the following tests are met:
1. You and your spouse or former spouse do not file a joint return with each other,
2. You pay in money (including checks or money orders),
3. The divorce or separation instrument doesn't say that the payment isn't alimony,
4. If legally separated under a decree of divorce or separate maintenance, you and your former spouse are not members of the exact same household once you make the payment,
5. You may have no liability to make any payment (in money or property) soon after the death of your spouse or former spouse; and
6. Your payment just isn't treated as child support.
If you're receiving or paying alimony, you have to use Form 1040 for your individual taxes. Regardless of income levels, deductions or miscellaneous tax problems, you can not use Form 104A or Form 1040EZ.
In preparing your tax return, the person receiving alimony will report the facts on line 11 of Form 1040. That person must also provide their social security number to their former spouse or face a fine of $50. The individual paying the alimony can claim the deduction on line 34a of Form 1040.
No comments:
Post a Comment