When it comes to alimony, taxpayers often have questions about how to handle their taxes. In the most basic terms, it’s quite easy: the spouse who is paying alimony can deduct the amount of the alimony payments from their return; the spouse who is receiving alimony must report the alimony payments as taxable income. However, many people are confused about what counts as alimony, leading to inaccuracies and mistakes on many tax returns.
The IRS checks reports of alimony paid with alimony received to ensure both parties are reporting the same amount. If the numbers don’t match, you can count on the tax authorities following up to get one (or both) tax returns corrected. In some cases, this can lead to issues with unpaid taxes, fines, and penalties.
If you’re not sure how to report alimony (paid or received) or you need help getting out of a tax problem created by incorrect reporting, Taxation Solutions, Inc. can help. Here in San Antonio, we’re the expert you can rely on to resolve tax issues large and small. Put our 40+ years’ experience to work by calling our team today!