Spousal Support and Taxes: What to Know If You Receive Spousal Maintenance

 Posted on March 23, 2016 in Alimony / Maintenance

If you currently rely on spousal maintenance payments as a form of income, it is important that you understand your tax responsibilities related to this income. Spousal maintenance, unlike child support payments and property settlements, is taxed. If you do not pay your taxes on the spousal maintenance money you receive, you can face an audit from the Internal Revenue Service (IRS).

Do not enter tax season without a solid understanding of your tax responsibilities as a spousal maintenance recipient. If you are unsure about what you need to do with your taxes this year, contact an experienced divorce attorney to discuss this and other ways your divorce can affect your taxes.

Reporting Your Spousal Maintenance Income to the IRS

If you are a recipient of spousal maintenance payments, you need to report the amount you received, in full, using either Form 1040 or on Schedule NEC on Form 1040NR. Your former partner has to report what he or she paid to you on his or her tax return as well. If either partner does not report the spousal maintenance amount that he or she paid or received, the other partner's return may be used to estimate the unreported amount. The paying spouse must also provide the receiving spouse's Social Security number on his or her tax return. Failure to do so can result in a $50 fee.

What If My Former Spouse and I File Our Taxes Jointly?

If you were still married at some point during the past year, you have the option to file your taxes jointly with your former spouse. If you choose this option, your former spouse cannot deduct his or her spousal maintenance payments and you do not pay taxes on them. This is also true if you reside in the same household. These rules are part of the seven guidelines that the IRS uses to determine whether an amount paid may be considered to be alimony and thus subject to the applicable taxation.

What If I Received a Lump Sum Payment?

It is not uncommon for an individual to receive a lump sum alimony payment instead of his or her spousal maintenance payment in monthly installments. If this is how you received your spousal maintenance award, it probably is not taxable because it was a part of the division of your assets in your divorce. Discuss this with your attorney or accountant to be sure whether your lump sum spousal maintenance amount is taxed.

Work with a Kane County Divorce Attorney

For answers to your divorce-related questions and legal guidance you can trust, work with one of the experienced Kane County divorce attorneys at the Goostree Law Group. We can help you gain a better understanding of the issues you are currently facing and protect your rights as a recipient of spousal maintenance. To get started, contact our firm today to schedule your free legal consultation with a member of our team.

Sources:

https://www.irs.gov/pub/irs-pdf/f1040.pdf

https://www.irs.gov/pub/irs-pdf/f1040nr.pdf

https://www.irs.gov/taxtopics/tc452.html