Over 50% of marriages finish in divorce within the United States. Many divorce decrees embrace provisions for the cost of alimony. The IRS takes the place that such funds represent a type of revenue and create an alimony tax deduction for the particular person making funds.
According to the IRS, alimony funds are taxable to the recipient within the yr obtained. In flip, the particular person paying the alimony can declare a deduction for the funds if the next assessments are met:
1. You and your partner or former partner don’t file a joint return with one another,
2. You pay in money (together with checks or cash orders),
3. The divorce or separation instrument doesn’t say that the cost isn’t alimony,
4. If legally separated beneath a decree of divorce or separate upkeep, you and your former partner should not members of the identical family once you make the cost,
5. You don’t have any legal responsibility to make any cost (in money or property) after the loss of life of your partner or former partner; and
6. Your cost isn’t handled as youngster help.
If you’re receiving or paying alimony, you will need to use Form 1040 for your private taxes. Regardless of revenue ranges, deductions or miscellaneous tax points, you can not use Form 104A or Form 1040EZ.
In making ready your tax return, the particular person receiving alimony will report the data on line 11 of Form 1040. That particular person should additionally present their social safety quantity to their former partner or face a fantastic of $50. The particular person paying the alimony can declare the deduction on line 34a of Form 1040.