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The impact of alimony on taxes in Texas

On Behalf of | Jan 13, 2017 | Alimony

Diving headfirst into a divorce without knowing the first thing about it is a pretty scary thing. When it comes to alimony, it can be the epitome of scary to some spouses while other spouses can’t wait for the payday. In some Texas cases, alimony may not be an issue or option at all, as each situation is different. As they relate to taxes, these alimony payments may be deductible by the payer if certain requirements are met. Additionally, the payee may end up paying tax on this income.

Alimony may be deductible pending certain requirements. These requirements include that neither spouse files a joint tax return, the payment is in cash form, the language within the divorce decree does not state that the payment is anything but alimony and each spouse lives separately. Also, the payer has no liability of making an alimony payment after the death of the payee. Alimony is not to be used as child support, which is never deductible. Property settlements also do not qualify as alimony.

The alimony recipient will end up reporting the full amount of alimony as income on his or her taxes. Just as income is reported for a job, it is the same concept for spousal support. For tax filing purposes, the alimony recipient will need to provide the paying spouse with his or her Social Security Number, if he or she has not already done so. This could eliminate the possibility of the receiving spouse from incurring a $50 penalty fee. Since the spouse paying alimony is obviously not receiving any, he or she will not need to pay any taxes as a result of the payments.

Divorces involving alimony can be confusing and complex for some individuals. An experienced Texas family law attorney can address any concerns that one might have regarding the impact that a divorce with alimony could have on one’s taxes. In seeking such assistance, this can potentially protect against any costly mistakes that a spouse could make in traveling this road alone.

Source: FindLaw, “Avoid Alimony Monthly Payment Programs“, Accessed on Jan. 11, 2017

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