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Who Pays Taxes on Alimony?

Who Pays Taxes on Alimony

The default rule is that alimony is deductible on the tax return of the PAYER spouse and included on the income tax return of the PAYEE spouse. Thus, if you are receiving monthly checks from alimony, you probably need to recognize that as income on your return. However, I say this is the general rule because in certain circumstances the Payer spouse may be the one who recognizes the income.

A divorce attorney in Salt Lake City should always explain the consequences of alimony in the divorce settlement. There are too many ex-spouses surviving on little more than alimony payments while they look for another job. Once it comes time to file taxes, they are surprised to find out that they owe a lot of money to the IRS. In some cases, the divorce settlement may include an agreement that the payer spouse does not deduct the alimony payment, in which case it is not taxable to the payee spouse.

An agreement by the payer spouse not to deduct the expense occurs under several circumstances. In many divorces, this deduction becomes part of the negotiation process. For example, one party may be willing to settle for less property in the settlement as long as he/she can recognize the deduction of alimony on his/her tax return. On the other hand, the payee spouse might be willing to accept less alimony or less property if the payer spouse is willing to pay the taxes on the amount.

Additionally, the IRS is not setup to withdraw its share from the alimony payments. Thus, you may end up paying interest on the unpaid alimony over a year’s time. Furthermore, it becomes much more difficult to make that one lump sum payment at the end of the year. Therefore, it may be in the payee spouses best interest to give up something in the divorce in exchange for the payer spouse to pay taxes on the alimony in the future. Because taxes represent such a large part of our financial responsibilities, no divorce attorney in Salt Lake City should ever let his/her client make a decision regarding alimony without considering the additional tax responsibility.

Why is there a Waiting Period for Divorce in Utah?

The waiting period for divorce in Utah is 90 days. The clock starts ticking once the original petition is filed. From that date, a divorce decree can be entered no earlier than 90 days later. Not all states have waiting periods for divorce. This period can be waived if the couple takes certain parenting or divorce education classes. Thus, it is possible to get divorced in Utah in less than 90 days.

The purpose of the waiting period is to prevent couples from making rash decisions. Although a divorce usually comes after months, or even years of struggle, it is often demanded by one spouse after there has been a heated disagreement. This waiting period lets the couple have time to decide if divorce really is the best option. It is not uncommon for a couple to recognize the changes that will occur after the divorce and decide they can work things out.

Another reason for the divorce waiting period is to protect children in the family unit. Divorce can have serious consequences on children. Although there are ways to minimize the burden placed on children with divorced parents, ideally those children would have both parents in the home. Because the Utah legislature recognizes the importance of families, it has set out these waiting periods in order to encourage parents to seek counseling or other alternatives to filing for divorce.

There are other times where this waiting period causes more stress on the children. In those situations, your divorce attorney should work hard to help you get that period waived so that your children can quickly find a new routine. More stability often returns to the lives of children once the divorce ends and each parent has settled into a new life.

Free Consultation with Divorce Lawyer

If you have a question about alimony or divorce law or if you need to start or defend against a divorce case in Utah call Ascent Law at (801) 676-5506. We will help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506