Call 609-267-0070

Located Directly Across From The Burlington County Superior Court

NJ Divorce Law: Alimony/Spousal Support Tax deductions

During a divorce, alimony, also referred to as spousal support, is the exchange of money between former spouses when, at the end of a fairly long marriage, there is a substantial difference in the parties' actual income or income earning ability. The federal tax code permits the person paying a spousal support to deduct the payment from their federal tax obligation and further requires the recipient to report alimony as income, no different than a paycheck from a job. Section 71 of the Internal Revenue Code (IRC) has certain technical requirements for purposes of deducting and declaring alimony upon tax returns. Among these is the requirement that there be a written document between the parties memorializing the alimony obligation.

While most people would expect that the writing requirement mandates a document of great formality the tax court has ruled to the contrary. In fact, in several reported tax court decisions the mere exchange of letters regarding the alimony obligation between the parties or letters written between attorneys has been held to satisfy the written separation agreement requirement of Section 71 of the IRC. Therefore, in the event one spouse is paying the other spouse support even without a Court Order, various revenue rulings permit those payments to be deducted by the party paying the spousal support obligation. A recipient should be aware that they will then have a tax obligation on every dollar received under such an arrangement.

It may be advisable, particularly for the party receiving alimony, to consult with an accountant for tax-planning purposes. Unlike typical W2 wages, there is no generally automatic tax withholding from alimony payments. If no preparation is made, the receiving spouse made find him/herself in the position of owing a substantial debt to the IRS upon filing annual income tax returns.

It is always wise to contact a competent attorney who understands the tax code and the alimony laws of the particular state in which you are divorcing your spouse.

Author: Christopher Musulin, Esq., is a NJ Divorce Attorney in Mt. Holly, NJ, who has written various articles on Alimony laws in New Jersey.

No Comments

Leave a comment
Comment Information
Email Us for a response

AmeliaStaffordshire Bull Terrier

Meet our Dogalegal, Amelia, a Staffordshire Bull Terrier and Office Mascot! She has greeted clients at our office door for many years. But, due to her overly welcoming personality,Amelia spends most days at a Doggy Daycare where she can freely display her affectionate nature.

To Save Another Like Her, Click Here
Contact Smith Jadin Johnson ยป

Let Us Help You

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Office Location:

Musulin Law Firm, LLC
135 High Street
P.O. Box 100
Mount Holly, NJ 08060

Phone: 609-267-0070
Fax: 609-267-7713
Map & Directions