Alimony is Tax Deductible

When you are getting a divorce, the last thing you want to worry about is being required to pay alimony. However, there are some reasons why it is advantageous to agree to pay alimony as part of your divorce settlement.

As opposed to child support, alimony is a tax-deductible expense to the person who pays it. In return, the person who receives it is taxed for the full amount. Child support is a non-tax-deductible expense to the person who pays it. In some cases, agreeing to pay alimony will actually be a financially sound decision for both parties. This advantage is usually obtained by couples that have very disparate income levels.

Take, for example, a divorcing husband and wife. He makes well over $100,000 per year and she draws just $23,000 as a teacher. Since he is in an entirely tax bracket from his wife, the husband needed any deduction he could claim to reduce his taxes. By claiming alimony for his wife, he could pay her enough for alimony in addition to any extra taxes she would have to pay for receiving it.

If you have questions about alimony or child support, it is advised that you seek answers from a family lawyer immediately.