taxes

Alimony payments affect taxes

Taxes » Tax Deductions » Alimony Payments Affect Taxes

Woman going over numbers on paper, laptop on table

When the end of matrimony leads to the start of alimony, each parting partner can feel the tax effects.

If you are the ex-spouse getting alimony payments, the money is taxable to you as income in the year it is received. This added income calls for a couple of additional tax considerations for the recipient.

A receiver's tax costs

First, because no taxes are withheld from alimony payments, you might need to make estimated tax payments or increase the amount withheld from your paycheck. If you don't, you could end up owing the Internal Revenue Service when you file your final return.

Secondly, your option to file shorter, simpler tax forms disappeared with that first alimony check you cashed. Alimony payments must be reported on line 11 of the long Form 1040.

Tax benefits for the payer

What about the ex making the payments? He or she may complain every month when writing the check, but that taxpayer now has a new tax deduction.

Alimony payments are subtracted from the payer's income on line 31 of Form 1040. In addition to entering how much alimony was paid, the filer must include his or her ex-spouse's Social Security number. This enables the IRS to cross-check deducted payments against reported alimony income.

A spouse who gets alimony and refuses to give his or her ex a tax ID number could face a $50 tax penalty. And if you as the payer know the number but forget to write it on your return, you could face a separate $50 penalty. Worse, if the alimony recipient's tax ID is missing, the IRS could disallow the deduction.

In cases where a divorce decree calls for alimony and child support, and the amount of each is specifically stated, only the alimony is taxable. Child support is not taxable as income, nor can the partner paying it deduct the cost.

The IRS provides more information on tax issues facing divorced couples in Publication 504, Divorced or Separated Individuals.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
Tax breaks for life's big events
MORTGAGE REFINANCE AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 3.80%  0.02 3.78%
15 year fixed 3.04%  0.04 3.00%
5/1 ARM 3.14%  0.02 3.16%
 
View Rates in your area Next
Product Rate Change Last week
30 year fixed refi 3.88%  0.03 3.85%
15 year fixed refi 3.13%  0.04 3.09%
10 year fixed refi 3.14% --0.00 3.14%
 
View Rates in your area Next
Product Rate Change Last week
60 month used car loan 2.68%  0.03 2.65%
48 month used car loan 2.76%  0.02 2.74%
60 month new car loan 3.11% --0.00 3.11%
 
View Rates in your area Next
Product Rate Change Last week
1 Year CD 1.08%  0.01 1.07%
2 Year CD 1.18% --0.00 1.18%
5 Year CD 1.77%  0.01 1.76%
 
View Rates in your area Next
Product Rate Change Last week
Balance Transfer Cards 15.87%  0.01 15.86%
Cash Back Cards 16.37% --0.00 16.37%
Low Interest Cards 11.10% --0.00 11.10%
 
Next
advertisement

Connect with us