Alimony Money and Tax Challenges for An Ex Spouse
Posted on Jun 21, 2013 12:00am PDT
The mere mention of spousal support in Georgia can provoke an emotional
response, both for those who pay and those who receive it. Beyond its
reputation, though, alimony has both merits, and financial pitfalls, for
the one who receives it.
Taxes, for one, may surprise the alimony recipient. Taxes that were once
a joint concern now become more challenging to a single person who must
not only meet everyday expenses but also look ahead to April 15 alone.
To head off IRS trouble, an alimony recipient should consider the following
guidelines.
First, if there are kids, is the paying spouse claiming them as dependents
on a tax return? If so, there goes one deduction. Second, at least in
year one after a divorce, an accountant or other tax professional may
be able to save the receiving spouse far more money than if they were
to utilize a simple piece of tax preparation software that does not take
all of the unique family circumstances into consideration.
In addition, quarterly payments will make the tax burden lighter come April
15. Four payments a year, usually made in April, July, October and January,
are far easier to manage than a lump sum. The receiving spouse can also
work with the IRS to make payments on taxes owed; remember, though, that
interest and penalties will keep growing until the total amount of taxes
owed has been paid.
Courts usually determine the amount of spousal support based on the earning
capability of both spouses, their current financial situations and their
incomes during the course of the marriage and as it is ending. Moreover,
they can factor in job losses or occupational changes as well as health
issue and medical emergencies. Spouses going through a divorce should
make sure they have a thorough understanding of how alimony is determined
and how it will affect their taxes in order to ensure the best possible outcome.