Alimony Money and Tax Challenges for An Ex Spouse

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.