Taxes and Alimony

Are you receiving a spousal support payment (“alimony”) from your ex-spouse? Then this blog might be of interest to you!

In North Carolina alimony must be claimed as income on your taxes every year that you receive alimony payments. According to Sections 61(a)(8) and 71(a) of North Carolina’s Tax Code if a wife is divorced or legally separated from her husband under a decree of divorce or separate maintenance, the wife’s gross income must include payments of spousal support. Additionally, a taxpayer must include alimony and separate maintenance payments in gross income. A wife who has not included maintenance payments on her taxes is liable for an addition to tax under Section 6651(a)(1). Section 6651(a)(1) imposes an addition to tax upon a taxpayer who fails to file a timely Federal income tax return, unless the taxpayer demonstrates that the failure to file is due to reasonable cause and not due to willful neglect. Sec. 6651(a)(1); United States v. Boyle, 469 U.S. 241, 245 (1985). This information is extremely important, especially for women whose only income is their alimony payments from their ex-spouse. No one wants to be audited and be potentially liable for tax fraud so following the Tax Code in this situation is of the upmost importance!

However, you and your ex-spouse can come to an agreement where he is not allowed to deduct the alimony payments from his taxes and in turn, you will not be taxed on your alimony payments. Whatever you and your ex-spouse decide it is important to note that you cannot have the benefits of both worlds, that is, your ex-spouse cannot deduct the alimony payments from his taxes and you not claim the payments on your taxes. If he deducts the payments you must claim the payments on your taxes.

Another important thing to note is that property settlement payments do not have to be taxed. So if your payments are by way of a property settlement you do not have to claim them as income on your taxes.

In short, do not forget to file your alimony payments as income on your 2013 taxes!

By: Anna Gray Carpenter

Related articles

• Can a Wife Who Earns More Than the Husband Be Entitled to Alimony in North Carolina? (gastoniafamilylaw.com)
• More women now paying child support & alimony; take note of the tax implications (dontmesswithtaxes.typepad.com)