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Taxability of Alimony – “Do I Have to Pay Tax on My Alimony?”

By Mar 18, 2016 Posted in Articles

In many divorce cases, alimony (which is also sometimes called “spousal support”) is awarded.  The concept of alimony is to award money from one spouse to the another during the pendency of the proceedings pursuant to an order of the court or after the entry of the Decree.  Alimony has to be court ordered to be tax deductible.

In Iowa, there are three types of alimony: reimbursement, rehabilitative and traditional alimony.  Each serves a different purpose.  The purpose of alimony, however, is to typically to assist a lower wage earning spouse to maintain the standard of living they had during the course of the marriage.  There are many criteria to the award of alimony as it is not payable as a matter of right. 

What is of import this time of year is how these payments will be treated for tax purposes.  Normally, alimony payments made because of a court order or decree are income to the spouse receiving the alimony and deductible from the income of the spouse paying the alimony.  There are many important aspects of the payment of alimony that affect the tax implications of the receipt and/or payment of the alimony.  Alimony is customarily deducted from the person who pays the alimony on their tax return even if that person does not itemize deductions on their tax return.  The alimony will be included in the income portion of the tax return for the individual receiving the alimony.  It is imperative that each party discuss the implication of the receipt and/or payment of alimony with their tax preparer. 

For more information on family law related issues, please contact Shannon Simpson at Simpson Legal Group, LLC today at (712) 256-9899.

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50 Northcrest Drive, Council Bluffs, Iowa 51503
Phone: 712.256.9899

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