One of the most hectic periods of the year for many Americans is tax time. Forms and receipts must be gathered, intricate tax forms must be carefully reviewed and complex calculations must be made. Although Tax Day 2012 is still far away, it’s never too early to talk about beneficial deductions – this is especially true if you are divorced.
If you are recently divorced and paying spousal support, you may be aware that your former spouse must report it as income to the Internal Revenue Service (IRS). However, did you know that you may also be able to deduct spousal support payments from your federal income taxes?
In today’s post, we will continue to take a short look at some general tax guidelines provided by financial professionals for taking advantage of the spousal support deduction.
Please see the previous post for more information.
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6. In many scenarios, a person lives in property owned by their former spouse without making any type of payment (i.e., rent, mortgage, repairs, insurance, etc.). Financial professionals caution, however, that the spousal support deduction is not available to the spouse who actually makes these payments on the property. Simply put, property payments don’t count as alimony even if the former spouse is living there for free.
7. While it may seem obvious, tax professionals caution that in order to claim the spousal support deduction, the divorce/separation agreement cannot expressly declare that payments are not to be treated as spousal support.
8. In keeping with the previous point, financial professionals caution that in order to claim the deduction, any obligation to pay spousal support must end upon the death of a spouse.
9. One area that people may overlook in determining eligible deductions for spousal support is life insurance premiums. Here, financial professionals advise that life insurance premiums paid on behalf of a former spouse/to the extent the former spouse owns the policy may potentially be deducted.
To learn more about divorce, alimony/spousal support or property division here in Texas, contact an experienced and skilled legal professional. Names have been withheld to protect the identity of the parties.
This post is for informational purposes only and is not to be construed as legal or financial advice.
Stay tuned for more from our Ft. Worth family law blog …
Business Insider, “10 steps to take to advantage of your alimony tax deduction” Oct. 30, 2011