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Alimony Taxes and Tax Deductions

Alimony Taxes and Tax Deductions

What is Alimony?

Alimony, also known as spousal support or maintenance, is a financial arrangement established following a divorce or separation. It involves one spouse providing financial support to the other, typically the lower-earning spouse, with the aim of helping them maintain a similar standard of living to what they enjoyed during the marriage. Alimony can take various forms, including temporary, rehabilitative, and permanent alimony, each serving a unique purpose in addressing the financial needs of the parties involved.

How It Used to Work

Historically, alimony had distinct tax implications for both the payer and the recipient:

  • Payer Deduction: The spouse making alimony payments could deduct those payments from their taxable income. This deduction often provided significant tax relief to the payer.
  • Recipient Taxation: On the flip side, the spouse receiving alimony had to report it as taxable income.

Alimony Tax Reform

The Tax Cuts and Jobs Act (TCJA), which went into effect in 2019, brought significant changes to the taxation of alimony:

  • Payer’s Deduction Eliminated: Under TCJA, the payer of alimony can no longer deduct these payments from their taxable income. This change was implemented for divorces finalized after December 31, 2018.
  • Recipient’s Taxation Remains: The recipient of alimony is still required to report it as taxable income. This aspect of alimony taxation remains unchanged.

Conclusion

Alimony taxes and deductions are critical considerations in divorce proceedings, and recent changes in tax laws have altered the landscape. While alimony payers can no longer deduct payments, recipients must still report them as taxable income. To navigate these changes and ensure a fair outcome for both parties, professional guidance from Priority Tax Relief can be invaluable. We specialize in untangling the complexities of alimony taxation, providing expert advice, tax planning, and compliance support. When it comes to alimony tax matters, trust Priority Tax Relief to help you achieve financial clarity and peace of mind during a challenging time.

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FAQs

 The simple answer is no. A business and a person are completely separate, thus, any personal tax debts or liabilities should not affect your business.

Tax debt can be an exhausting and complicated thing to deal with on your own. Communicating with the IRS and professionally handling your tax liabilities are just two of the services companies like Priority Tax Relief can offer.

No. The IRS’s Innocent Spouse Relief protects you from paying these additional taxes. However, this does not relieve you from household employment taxes, business taxes, individual joint responsibility payments etc. Priority Tax Relief helps you learn more about innocent spouse relief.

The most popular option to date would be an Offer In Compromise (OIC). At Priority Tax Relief, we help tax relief help become more accessible to taxpayers in need and help them understand how they can qualify for these options.

IRS tax liens are legal claims on your property when you do not settle your tax debts. The IRS usually sends out a notice when no payment has been made after a liability assessment. Find out more about tax liens with Priority Tax Relief.

Yes. Not only can the IRS put a claim on all your current property, tax liens can also affect any property or intangible or tangible assets that you obtain in the future. At Priority Tax Relief, we help you understand federal tax liens and how to communicate with the IRS.

 

Tax levies are the actual seizure of your property and are different from legal claims or tax liens. Settle your taxes before the IRS sends out a notice. Priority Tax Relief helps you understand tax levies and how you can avoid them.

Yes. Not only can they seize physical property but they can also legally take hold of the money in your bank account and other wages. To avoid this from happening, contact Priority Tax Relief now.

Your debt will, unfortunately, continue to grow and you will possibly lose a great number of your assets. It is definitely a scenario we do not wish to see happen to anyone, that’s why Priority Tax Relief makes sure that our help becomes within reach.

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