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Barbara L. Jouette, Attorney, P.C.
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Tax implications of alimony

As many Texas residents may know, alimony has implications for income tax. Both the payer and the payee need to indicate the amount he or she paid in alimony and the amount that was received. Beyond that, it is necessary to provide the Social Security number of the other party on one's tax return, without which a penalty may be assigned. If the divorce settlement specifies that any payments are not alimony, then they are not considered alimony when filing income tax.

For tax purposes, the assignment of alimony has specific requirements when the spouses no longer file jointly or live together. Alimony payments in the form of a check, money order or cash are made to and received by a spouse before the decree is final and to an ex-spouse afterward. Payments may also be made to a third party who represents one's spouse or ex-spouse. Once the individual receiving alimony dies, the ex-spouse's obligation to pay alimony ceases. Alimony is considered a deduction for the payer and perceived as income for the ex-spouse receiving alimony.

There is a difference between alimony and payments made for the purpose of property division. Property settlements laid out in the divorce agreement, whether paid in installments or at one time, are not considered alimony. In addition, if the decree orders that payments are required for property upkeep, this is not considered alimony.

Child support payments are not to be confused with alimony. If both alimony and child support are paid at one time, the amount due for child support is extracted from the payment first, and the remainder is applied to alimony.

The divorce decree defines alimony. Depending on the situation, an attorney may help a spouse structure the divorce settlement in a way that clearly earmarks the alimony obligation.

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