When a divorce decree provides for spousal support, both the individual paying this support payment and the individual receiving the support payment will need to be aware of the tax implications of these payments. In fact, the choices that these divorcing individuals make regarding the tax issues associated with spousal support payments can end up costing or saving both parties a significant amount of money in the long run (and may end up putting more money in the hands of one partner, instead of in the hands of the IRS).

At Goldman Law, LLC, our Denver tax law attorneys understand all of the intricacies of the taxation issues that apply to spousal support payments, as well as other post-divorce decree payments (like, for example, child support payments). We are skilled at assessing people’s situations and needs to effectively help them plan and prepare for the future tax implications of various aspects of their divorce.

Denver Tax Attorney   Spousal Support Taxation

When you need guidance with spousal support taxation or any tax issues related to divorce, contact the Denver tax law attorney at Goldman Law, LLC.

Important Facts about Spousal Support Taxation

Although child support payments and property settlements cannot be tax deductible (according to the IRS), divorcing parties will have a choice as to whether they would like spousal support (also referred to as alimony or spousal maintenance) to be considered:

  • Taxable income (for the recipient)
  • Tax deductible (for the payee).

While this choice will inherently depend on the specific financial situation of both parties in the divorce, here are some important facts to keep in mind:

  • For the payor – If the intention is to have spousal support payments be tax deductible, then these payments must be made in cash or by check, annual income taxes can’t be filed jointly with the former spouse and the two individuals can’t live in the same household.

    Additionally, these payments must be made according to a specific time frame, and certain actions will have to be taken when filing taxes each year to ensure that the IRS permits the alimony payments to be tax deductible.

  • For the payee – If the spousal support payments will be tax deductible for the payor, then the payee is required to report the entire amount of alimony received as taxable income.

    If the payee fails to do this (either by not reporting any of these payments or by miscalculating the amount of these payments), then the payee can be audited by the IRS and may face some penalties.

It’s important to point out that there may be alternatives to spousal support payments – like, for example, lump-sum settlements – and that each alternative to alimony will have its own tax implications. Therefore, make sure you work closely with an experienced tax lawyer when you are working out the financial aspects of a divorce so that you are fully aware of and can be in compliance with all applicable tax issues.

Denver Tax Law Attorney at Goldman Law, LLC

If you need guidance regarding the financial aspects and taxation issues associated with divorce, or if you need any assistance with a tax matter, you can trust the Denver tax law attorney at Goldman Law, LLC to expertly guide you and provide you with the highest quality of legal services.

To receive a professional case evaluation, contact us by calling (303) 656-9529 or by emailing us using the contact form on this page. From our offices in Denver, we serve clients throughout Colorado.