When you are going through a divorce, you might consider how the divorce orders can affect you. If you are paying or receiving alimony, you might be shocked to learn that this can affect your income tax return. With that in mind, you should make sure that you have handled alimony payments in the correct manner before the upcoming deadline of April 18 for filing your income tax return.
If you are paying alimony, you will get a tax break. You must report the alimony payments on line 31 of a Form 1040. This subtracts the amount you paid from your income. When you report this deduction, you will need the Social Security number for the recipient so that the Internal Revenue Service can cross-check the information you provide with the return of the recipient. Not including the Social Security number can mean you will face a $50 tax fine unless your ex refused to provide the number, which would mean the ex will face that fine. Without the tax ID number of the recipient, the IRS might not allow you to claim the deduction.
If you are recipient of alimony, the payments you receive are taxable. They must be reported on line 11 of the Form 1040. You will not be able to use short forms to file your income taxes. This will increase your tax liability, so you might choose to have more taxes taken out of your paychecks if you don’t want to have to pay the IRS a lump sum when you file your income taxes each year.
Source: Bankrate, “Alimony payments affect taxes,” Kay Bell, accessed April 14, 2016