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Understanding the tax implications of spousal support

Filing taxes can sometimes be a complicated process. After all, most people want to ensure that they get the highest tax return check possible. Florida residents may find it interesting to learn that according to a report published in the Journal of Accountancy, the Internal Revenue Service appears to have identified alimony as a possible avenue for tax filing discrepancy and will be devoting additional resources into reviewing tax returns from both alimony receivers as well as alimony payers.

Under tax law, alimony payments are treated as taxable income. Thus, if one is the recipient of any alimony payments, then they must report alimony payments as taxable income for that filing year. On the other hand, if one is making any alimony payments, then one can deduct the alimony payments from their taxable income without incurring any penalty for doing so.

In early 2014 a report issued by an IRS watchdog indicated that there appears to be a huge discrepancy between the alimony payments that are claimed by receivers and the corresponding alimony deductions reported by ex-spouses on their tax returns. It seems that for tax returns that were analyzed for the year 2010, a total of nearly 570,000 returns in all, alimony deductions that were reported exceeded their counterpart income reported to the tune of over $2.3 billion. Following this discovery, the IRS is expected more closely scrutinize alimony tax returns moving forward.

If one does make alimony payments or if one is the recipient of alimony payments, then there are some helpful tips that may help insulate one from the risk of an IRS audit. It is important to make sure that one has a clear understanding of what can be considered alimony and what cannot. Some may find that divorce documents are not written with enough detail. Thus, it may be helpful for some to have another person double-check their documents, and one should make sure they understand the terms in their divorce paperwork.

Furthermore, it is important to double-check with ones ex-spouse on what they are reporting on their tax returns so that both tax returns are in sync. Discrepancies between corresponding tax returns are easy for the IRS to flag for special review and possibly an audit. By preventing such inaccuracies, spouses may be able to make sure their tax filings meet IRS requirements, to avoid an audit and penalty.

Source:, "The IRS thinks you're cheating on your alimony," May 29, 2014

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