Deducting Alimony Payments and Current Alimony Tax Liability Laws
Current alimony tax liability laws make life confusing for many as almost one half of marriages end in divorce. This event can affect you emotionally and financially. Going through a divorce is financially taxing enough that additional tax burdens are hopefully avoidable. So how can you avoid taxes when you go through a divorce? Well first, you should think about the tax rules that allow you to write off alimony payments as a tax deduction. For basic details, have a look at the article entitled, Divorce and Taxes. In this world nothing is certain but here are some tips!
Once you have a basic understanding of the rules that surround alimony deductibility, you can then begin to understand tax planning strategies related to your divorce. Alimony and maintenance payments are taxable to recipient and deductible for payer and can often include payments that are made prior to the agreement if:
a) written agreement made prior to the end of following year
In this situation, you could essentially deduct any alimony payments that you may have paid your spouse even prior to any agreement being put into place. This could mean substaintial tax savings depending on your tax rate (tax bracket).
It should also be noted that alimony and maintenance payments apply to both ex-spouses and ex-common-law spouses as well. There are many financial issues of divorce and whether or not you can afford a divorce may depend on the particulars of your situation. As always you should check with your tax lawyer, accountant or tax preparer for details related to your specific situation.
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Alimony Tax Liability Laws
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