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Alimony's effect on personal income taxes

Georgia residents who are dealing with divorce may wish to learn more about how alimony can affect income taxes. According to the IRS, alimony is any money paid to a spouse or former spouse as part of a court order during divorce or separation. Any money that is paid without legal obligation is not considered to be alimony for tax purposes. Furthermore, it does not matter if the alimony is to be paid on a permanent basis or included in a temporary decree., and it may be possible to claim payments to a third party as alimony.

Typically, alimony must be included as income by the person who receives it and may be deducted on the income tax return of the person paying it. There may be times when an individual can only deduct half of any alimony payment. For example, this is true when an individual is required to make mortgage payments or pay property taxes and insurance on a jointly owned home.

In some cases, there are payments made to a spouse under a court order that do not qualify as alimony. For instance, child support payments and payments to maintain a partner's property are not considered alimony. If non-cash property payments are made from one party to another, those will generally not qualify as alimony as defined by the IRS.

As part of a divorce settlement, it is common for one spouse to make payments to the other spouse based on their ability to maintain a reasonable lifestyle. Talking to an attorney can make it easier to negotiate a reasonable support order. Furthermore, legal counsel may be able to explain how alimony factors into an individual's tax obligations for a given year.

Source: Internal Revenue Service, "Alimony," Accessed April 7, 2015

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