Alimony Payments Have Tax Implications
When the end of matrimony leads to the start of alimony, how does it affect your taxes? Alimony payments you receive are taxable to you in the year received, according to the IRS.
The amount is reported on line 11 of Form 1040. You cannot use Form 1040A or Form 1040EZ. The person making the payment may claim a deduction in the year paid on Form 1040. You must give the person who paid the alimony your Social Security number or you may have to pay a $50 penalty.
If your decree or agreement calls for both alimony and child support and specifies amounts for each, only the alimony is taxable. Because no taxes are withheld from alimony payments, you may need to make estimated tax payments or increase the amount withheld from your paycheck.
Publication 504, "Divorced or Separated Individuals," describes this topic in more detail.
If your situation involves either the payment or receipt of alimony, please contact your tax preparer for an analysis of how it affects you.
This daily Tax Tip has been provided by the Internal Revenue Service.