If you divorced in 2017 and spousal maintenance was ordered, both you and your ex’s taxes will be affected. If you have been awarded Illinois spousal maintenance, or alimony, the payments are taxable to you as the recipient; if you are the payer, your payments to your ex-spouse are deductible.
Sometimes couples do not always accurately report alimony paid or received, which may land some in hot water with the IRS. In fact, inflated spousal maintenance deductions or the failure to report alimony income, or both, has resulted in lopsided IRS filings in the past. In the 5 years that ended in 2015, people paying spousal maintenance in the U.S. deducted roughly $57 billion while the recipients only reported receiving roughly $47 billion. The $10 billion dollar discrepancy has of course caught the eye of the IRS, so it is important to understand what you can and cannot claim as spousal maintenance to avoid problems.
What is Not Alimony for Tax Purposes?
If you are paying alimony, the IRS has a strict interpretation of what you can deduct. Generally payments not considered part of the alimony payment include child support, non-cash property settlements, use or upkeep the payer’s property when the spouse lives there rent free, or voluntary payments for items such as a new computer for your kid.
What is Considered Alimony for Tax Purposes?
Alimony may include payments made on behalf of your spouse to a third party as part of the divorce settlement agreement. These may include paying your ex-spouse’s medical bills, housing costs (rent, utilities, insurance), education/tuition costs, taxes and more. These payments are treated as received by your ex, who will then report the amounts as alimony received.
Get More Information Regarding the Tax Consequences of Illinois Spousal Maintenance
Because it is important to give an accurate accounting when reporting spousal maintenance paid or received, you will want to work with an experienced tax specialist or do some legwork of your own by visiting the IRS.gov website, IRS Publication 504, for more information regarding alimony payments.
Contact Our Illinois Spousal Maintenance Lawyer
Have questions regarding Illinois spousal maintenance? Contact the Libertyville family law offices of Ronald L. Bell & Associates for more information today at 847-495-6000.