When people with a high net worth determine that the time has come to divorce their spouse, an array of concerns may lie ahead. People may wonder how divorce will affect their financial situation in Lee County, and cities throughout Florida. After divorce, various obligations may arise, such as child support and spousal support. For those who receive and pay support, understanding key issues, such as tax obligations, is pivotal.
According to the Internal Revenue Service, those who pay spousal support are able to deduct the payments they have made on their tax return. Having said that, there are some conditions that those who have paid alimony should keep in mind. For example, if the person who wishes to deduct alimony payments does not provide his or her spouse’s taxpayer identification number or social security number, they may not have the ability to deduct spousal support payments. Furthermore, people cannot deduct voluntary payments that were not made under a separation or divorce decree.
Under certain circumstances, the IRS will not recognize payments as alimony and allow taxpayers to deduct what they have paid. For example, payments that are considered a property settlement, are made using an unacceptable payment method or are made by someone who is filing a joint return with the spouse are not deductible alimony payments. In addition to deducting alimony payments, it is also essential for those who receive alimony to realize that they are required to include spousal support that they have received as part of their income when filing taxes.