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Alimony Tax Mistakes

Tax Mistakes Regarding Alimony in Austin



Every year, thousands of individuals receive a notice from the IRS for payment of back taxes that concern alimony. Individuals are under an obligation to make payments on the alimony that they receive from a former spouse. If an individual does not make an alimony payment, then he or she may have to pay additional penalty fees to the IRS.

It is always in an individual’s best interest to accurately state income to the IRS the first time for a tax return. An individual should be sure to clearly state the total amount of alimony that he or she has received for the year. One is able to claim certain deductions that relate to alimony. If you are having trouble in filling out your tax returns and stating the alimony that you may receive, then a tax lawyer in Austin, Texas, can help you fill out your tax return. A tax lawyer will help you to avoid common mistakes in reporting your alimony payments to the IRS so that you do not have to worry about receiving future notices from the IRS.

In preparing to file your tax returns, you should try to keep detailed records of all of the alimony payments that you receive. If the IRS notices that different alimony payments are being reported amongst two spouses, then this raises concern. The IRS will likely send a notice to both spouses if the income has not been reported in the proper fashion. For those who have paid alimony, it is important for an individual to retain records of all cash and checks that have been paid to the other spouse. The receiving spouse should also make copies of the checks that he or she receives. A receiving spouse may also wish to retain copies of all bank statements that reflect deposits of checks made to a bank.

In order for alimony payments to qualify for deductions from the IRS, there must be a court order that states alimony is to be awarded to another spouse. If there has been no court order, then a recipient will not qualify for deductions on alimony payments. Also, a couple must be legally separated in order for payments to qualify for alimony deductions. Also, an individual must receive a steady stream of alimony payments from another spouse. If an individual has received very large alimony payments in the first few months after a divorce, then the IRS will consider this “front-loading.” Deductions will not be made available for these types of payments.

Sometimes, a spouse may also make a mistake in reporting child support and alimony payments together. The IRS requires that you report child support and alimony payments as separate payments. If you report them together in one category, then the IRS will likely forward a notice to your residence requesting a clarification of the mistake or requiring you to pay additional fees. You should meet with a tax lawyer if you have any questions concerning notices that have been sent to you from the IRS which concern alimony.