As is well known amongst divorcing individuals and financial professionals, the tax code allows the payor of alimony to deduct it from taxable income, while the recipient must include it in taxable income.
Unsurprisingly, divorced couples don't agree about alimony any more than they do about anything else. In March 2014, TIGTA, an IRS watchdog, issued a report identifying a large tax gap between alimony deductions by payers and the corresponding income claimed on ex-spouses' returns. As a result alimony is now a target that the IRS has identified and quantified. In fact, the IRS reported adjusting its audit filters to catch more high risk returns.so divorcing individuals, at least those paying and receiving alimony, will be at a higher risk for an audit.
Chris suggests people paying or receiving alimony:
- Fully understand what is alimony and what is not.
- Agree with your ex on what alimony amount you are putting on your respective tax returns.
- Ensure your separation agreement correctly specifies alimony.
- Get proper professional post-divorce support
- Avoid pushing the envelope on this issue.
No comments:
Post a Comment