Spouses who are paying alimony must pay careful attention to the “7 Do’s” of alimony, or risk losing the alimony deduction**. One of those seven requirement is characterized as “distance,” the requirement that spouses who are divorced or legally separated must live in separate households in order to qualify payments as alimony. An opinion of the […]
Alimony, spousal support, and separate maintenance are periodic payments made to a spouse or former spouse, which may be tax-deductible if all of the legal qualifications are met. Though reviled by many spouses and some lawmakers, alimony is a useful tool in the family lawyer’s arsenal, because it has the capacity to extend the time in which an equitable result can be achieved in a divorce. Alimony can be used to create tax savings that make more money available to a family. If all of the legal requirements are met, alimony and separate maintenance payments may be deductible from the payor’s income under I.R.C. §215 and must be reported as income of the recipient under I.R.C. §71. Chapter 3 of Frumkes & Vertz on Divorce Taxation is devoted to the tax consequences of alimony and spousal support.
Frumkes & Vertz on Divorce Taxation §7.5 Can a spouse (or exe) deduct legal fees paid to the other spouse’s lawyer? Only fees paid to a taxpayer’s own attorney will qualify for deduction (if all legal requirements are met). Legal fees paid to the attorney of the taxpayer’s spouse may be deducted only if structured as […]
Generous exes who pay more alimony than they are required might get an unwelcome surprise when they file their income tax returns. The U.S. Tax Court, in Baur v. Commissioner, T.C. Memo 2014-117, held that a taxpayer could not deduct alimony payments that exceeded the taxpayer’s contractual obligation. The taxpayer was also charged with accuracy-related […]
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