Remember Your Tax Obligations With Alimony

If you're in a situation where you've worked things out with your divorce lawyer, and are either paying or receiving alimony under the order of the court, it's important to remember that there are still tax considerations to keep in mind. While it's true that alimony was ordered by the court in order to ensure that someone is receiving financial support during a difficult time, this is not necessarily "free money" in the sense that some people may think.

The recipient of alimony for example, is considered to be paid a "salary" of sorts when receiving alimony payments. This means that alimony is considered part of taxable income and MUST be included as such when filing taxes. Even if you're receiving money from an ex-spouse, the government still gets a share.

Conversely, if you are the spouse that is paying alimony, the government feels that you've already paid "enough." For those that are required to pay alimony, a good divorce lawyer or accountant will advise you to include alimony payments are part of your tax deductions when you are filing for the financial year. You may be legally obliged to pay this, but there's no reason that your taxes can't take this extra, required expenditure into account.

It's important to remember that with any divorce, equitable distribution is the primary goal of the court. However,financial accountability is still very much a personal responsibility. For couples in which one spouse was primarily responsible for maintaining compliance and payments with the IRS, this isn't going to be much of an issue going forward, but for spouses that are less familiar with how this works, there's little choice; it has to be learned now.

So when you find yourself in the middle of a divorce, settling out the divisions of assets, always keep in mind that you now have financial obligations to uphold to the IRS. And alimony may be a part of that.