Though Caesar may have been urged to "beware the Ides of March," Americans must take care to "beware the Ides of April," which is better known as Tax Day. Taxes are often complicated to calculate and can seem understandably daunting.
To those Florida residents who have less-than-straightforward financial situations, Tax Day can seem even more formidable. However, one complicated financial reality does not have to hang up your tax preparation. When considered carefully, alimony can be dealt with in a fairly straightforward manner on your tax forms, whether you are receiving it or paying it out.
On federal tax forms, alimony can generally be treated as a deduction by the person who pays spousal support and is generally considered taxable income by the person who receives it. This breakdown holds true whether or not you choose to itemize your deductions.
The tricky part of the alimony equation is that the payments must meet the federal qualifications for what alimony consists of. Payments can only count as alimony when they are made after divorce or legal separation by couples filing independently. The payments must be governed by an official divorce or legal separation agreement. These documents may be temporary or permanent, but they must be issued by a court.
In addition, the payments must be made by a person living at a different address than the person receiving them. Exceptions to this rule can only be made by a court order.
The tax code is complicated and can be influenced by state law. Therefore, it is best to consult with a professional, should you have any tax-related questions. However, alimony is generally a fairly straightforward tax issue and should therefore not inspire significant tax-related stress.
Source: Forbes, "Taxes from A to Z: A is for Alimony," Kelly Phillips Erb, Mar. 3, 2012
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