Recent tax law changes can be expensive for people who pay alimony to an ex-spouse.
In divorce, one spouse or ex-spouse may become legally obligated to make payments to the other party. Because these payments are often substantial, being able to deduct them, or not, can be a significant tax issue. Before the 2017 Tax Cuts and Jobs Act , payments that met the tax-law definition of alimony could always be deducted by the payer for federal income tax purposes. And recipients of alimony payments always had to report the payments as taxable income.
For individuals who pay alimony, this change can be expensive — because the tax savings from being able to deduct alimony payments under the old-law rules could be substantial. Requirements for deductible alimony Whether payments required by a pre-2019 divorce agreement qualify as federal-income-tax-deductible alimony, or not, is determined strictly by applying the applicable language in our beloved Internal Revenue Code and related regulations. In general, what the divorce agreement says and what the divorcing couple might intend does not matter.
4. Ex-spouses cannot live in same household or file jointly After divorce or legal separation has occurred, the ex-spouses cannot live in the same household or file a joint Form 1040 for payments to qualify as deductible alimony.6. Cannot be child support The payment cannot be classified as fixed or deemed child support under the tax rules. The rules regarding what constitutes nondeductible child support are complicated and represent a nasty trap for unwary taxpayers.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Shell to stop buying Russian oil and gas, apologizes for recent purchaseOil giant Shell apologized on Tuesday for its purchase of Russian crude oil last week and announced it will withdraw from involvement in all Russian hydrocarbons.
Read more »
San Antonio among 'worst music cities' in recent reportAustin was dubbed 'America's No. 1 live music metro' and was listed as the fourth best...
Read more »
Before recent rise in inflation, Alaska wages grew 11% from 2010 to 2020Alaskans cashed in from 2010 to 2020 as yearly wages rose 11% from 2010 to 2020 when adjusted for inflation, according to the Alaska Department of Labor and Workforce Development.
Read more »
Future infectious diseases: Recent history shows we can never again be complacent about pathogensOne thing is certain: COVID-19 will not be the last challenge of our time. We need to prepare for the next challenge, using evidence and knowledge - via healthing_ca healthing COVID19
Read more »
Washington stuck with few options to lower gas prices, recent moves only push them higherPoliticians have no shortage of purported solutions to a global energy crisis that’s causing Americans to wince at the pump — but the painful reality, experts say, is neither President Biden nor Congress can do much about it.
Read more »
Inside the NBA's recent scoring surgeA number of the league’s biggest superstars have brought their best to the table as the playoffs near.
Read more »