Edward R. Weinstein, Esq.Edward R. Weinstein, Esq.

Tax Implications of Alimony in Monmouth County

Going through a divorce has several effects on a person’s life, emotionally and financially. There are issues regarding how to split up property, custody of children, child support, and alimony. Alimony can impact a number of aspects of a person’s life, both for the person paying the spousal support and the person receiving it.

There may be tax implications of alimony in Monmouth County that both spouses should be aware of. An experienced alimony lawyer can help provide you with information to understand what the ongoing process is for spousal support and its impact on your taxes.

Taxable Alimony Awards 

Alimony is considered taxable only if:

  • The payments are made via cash, check, or money order
  • The couple is no longer filing joint taxes
  • The payments are made under a separation or divorce agreement for spousal support
  • The payments were not specifically listed as not being alimony
  • These payments are not child support or part of a property split
  • There is no obligation to continue payment after the person receiving it dies
  • If the spouses are not divorced but separated, they cannot reside in the same household

Often, one spouse is ordered to pay both child support and spousal support. However, if the total payment made is less than ordered, the amount should first go to child support. Any leftover amount will be counted towards alimony payments.

When considering tax implications of alimony in Monmouth County, only the amount that was actually paid and not the amount that was ordered will be taxable.

Tax Consequences for Individuals Paying Alimony

The person that is charged with paying alimony does have the benefit of having the payments be tax deductible. However, this deduction is only for mandatory payments and not for any payments that a person makes voluntarily. In claiming this deduction, the person has to fill out a Form 1040 and fill out line 31A.

On line 31B, the person paying alimony has to put down the social security number of the spouse receiving alimony. If they fail to do this, they may be subject to a $50 fine.

If the payments are being made to a person who is not a United States citizen but the person paying is a citizen, then the person making the payments should withhold some of the payments for tax purposes. Generally, this is a 30 percent withholding per payment.

Tax Consequences for Receiving Alimony

The former spouse that receives alimony will have to declare the support as taxable income. They will need to fill out a Form 104 and report the spousal support payments on line 11.

The person receiving the payments will need to put down the social security number of the former spouse paying alimony. If the person does not do that, they may have to pay a $50 fee.

How a Monmouth County Lawyer Can Help

The tax implications of spousal support in Monmouth County can be very complicated. By meeting with an alimony lawyer, you can better understand your obligations to the IRS so that you are not penalized for any mistakes later.