Alimony and Tax


If you receive a monthly alimony payment, you are obligated to pay federal income tax on the alimony you receive (unless you obtain a private ordering which is very rare). Therefore, it is wise to calculate the estimated taxes you will be obligated to pay, and because you declare your alimony as income, your former spouse is allowed to deduct it on their tax returns (thus decreasing the amount of tax they will pay). So, it is wise to calculate the tax savings to your soon to be ex-spouse when negotiating how much alimony you are to receive. Money paid to you during your divorce case (temporary alimony) is not taxable as income to you unless it is in a Temporary Order entered by the Court. There are other rules that apply to determine the taxable effect of your alimony, and you should work closely with your attorney and accountant to determine the net amount of your alimony, versus the gross amount. Please be Careful!