If you're paying a significant amount of alimony to your ex-spouse each month, you're probably wondering what tax benefits you might be able to receive. After all, the income that you're sending to your spouse is not income that you're directly benefiting from. Shouldn't your ex be responsible for paying income taxes on the money and not you?
The answer to this question is, "yes." You can deduct your alimony payments from your taxes, and it's your ex who must pay taxes on this income.
It's important to remember, however, that alimony payments and child support payments are treated quite differently by the IRS. Be careful not to confuse alimony payments with child support when filing your taxes because child support payments are not tax deductible. Also, according to the IRS, in order for you to deduct alimony payments you must meet a list of requirements.
Requirements to deduct alimony from your taxes
When you're making alimony payments via a separation agreement, divorce decree or a divorce settlement, you can deduct the payments from your income if you meet each of the requirements that follow:
- You paid your alimony payments in cash, check or money order
- You didn't submit a joint tax return with your ex-spouse
- Your payments were not child support payments
- You and your ex-spouse did not live under the same household at the time you made your alimony payments
- You're not liable to make further cash or property payments in the event of your ex-spouse's death
I'm not sure how to appropriately deduct my alimony payments
How to file your taxes, and how to make appropriate deductions, is not always exceedingly clear. As such, North Carolina ex-spouses who have to pay alimony and child support may want to discuss their payments and potential tax liabilities and deductions with their family law attorney. Your attorney can instruct you on how to keep appropriate records for your taxes, in addition to recommending a tax accountant who can assist you with all your tax preparation needs.