If this is your first tax season since you began paying or receiving spousal support, it's essential to know how these payments are reported. With alimony now in the picture, you'll no longer be able to file a short form, assuming that you did previously. You need to use the long Form 1040.
You'll need to do some coordination with your ex-spouse. Both the payer and the recipient need to show the same amount of alimony on their taxes. The amount should clearly be spelled out in your divorce decree, separate from any child support payments (which are not reportable). Do not list property, gifts or other assets, even if they're cash, as alimony.
If You Paid Alimony
If you are the one making payments, you will list the total amount of spousal support paid during the year as a tax deduction on your return. You will also need to list your ex-spouse's Social Security number so that the Internal Revenue Service can cross-check the amount against what he or she reported receiving.
If you don't list that Social Security number, the deduction may not be counted. Your ex is required to use the number if you don't know or remember it or potentially pay a $50 penalty.
If You Received Alimony
If you were the recipient of alimony, it is considered taxable income. Since taxes aren't withheld from the payments when they're made, as they are from many other types of income, you may want to make estimated tax payments throughout the year or increase the taxable income withheld from your paycheck. This can help you avoid having a considerable amount due to the IRS when you file your taxes. Your tax preparer can help you determine whether this is necessary or recommended.
As noted, you need to report the same amount of alimony received as your ex-spouse is reporting paid. A discrepancy in amounts can cause tax ramifications for both of you. As noted above, you also need to provide him or her with your Social Security number or risk a tax penalty.
If this is your first year filing as a divorced person, it may be wise to seek guidance from a tax professional, even if you've done your own taxes previously. If your spouse was the one who handled the taxes, it's best not to go it alone for at least the first year. Things like filing status and dependent claims are essential to get correct. It's best to have your own tax preparer rather than share one with your ex. Your family law attorney can recommend someone in your area who is experienced in handling tax returns following divorce.
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