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Fall 2014 Newsletter: Beware emails from the “IRS.” Update_Fall2014.pdf


Summer 2014 Newsletter: Prepare for the Medicare surtax in your 2014 planning. Update-Summer2014.pdf


Winter 2013 CLIENT UPDATE Newsletter: Heath-care reform law gets underway for individuals. Update-Winter2013.pdf.


Fall 2013 CLIENT UPDATE Newsletter: Do you have obsolete inventory? Update-Fall2013.pdf.


Spring 2013 CLIENT UPDATE Newsletter: Tax legislation effects: Update-Spring2013.pdf.


Winter 2012 CLIENT UPDATE Newsletter: Year-end checklist for taxes: Update-Winter2012.pdf.


Fall 2012 CLIENT UPDATE Newsletter: Supreme Court upholds 2010 health care law: Update-Fall2012.pdf.


Summer 2012 CLIENT UPDATE Newsletter: Diversify investments by focusing on taxes: Update-Summer2012.pdf.


Spring 2012 CLIENT UPDATE Newsletter: 12 ways to improve your financial health in 2012: Update-Spring2012.pdf.


Winter 2011 CLIENT UPDATE Newsletter: Tax rules can provide relief when disaster strikes.  Update-Winter2011.pdf.


Fall 2011 CLIENT UPDATE Newsletter: New bonus depreciation rules.  UpdateFall2011.pdf.


Spring 2011 CLIENT UPDATE Newsletter: New tax rules offer opportunities. Are you saving enough?UpdateSpr2011.pdf.


Winter 2010 CLIENT UPDATE Newsletter: Small Business Jobs Act restores familiar tax breaks. UpdateWinter10.pdf.


Fall 2010 CLIENT UPDATE Newsletter: New 2010 tax credit available to small businesses.  ClientUpdateFall10.pdf.


Summer 2010 CLIENT UPDATE: Health care reform includes current and future tax changes.  ClientUpdate.pdf.


October 2014

Are alimony payments tax deductible?


According to the IRS, alimony is deductible by the payer in arriving at adjusted gross income and taxable income to the payee [IRC Secs. 71(a) and 215(a)]. For post-1984 divorce, a payment is treated as alimony for federal tax purposes if all of the following requirements are met (IRC Sec. 71):


  1. The payment must be part of a written divorce or separation instrument.

  2. Spouses cannot live together after divorce.

  3.   The payment must be made in cash or cash equivalents.

  4. The payment must be paid to or on behalf of a spouse or former spouse.

  5.   The divorce or separation instrument cannot specifically state that payments are not alimony.

  6. The paying spouse and receiving spouse must file separate returns.

  7. The payment cannot be called child support or deemed to be child support.

  8. The alimony must terminate at the death of the receiving spouse.


Keep in mind, each payment or stream of payments is tested separately for all alimony criteria. If a payment or stream of payments fails one of the tests, that payment cannot be treated as alimony for tax purposes.


Taxpayers are free to choose the tax effect of alimony. Alimony can either be deductible to the payer and taxable to the payee or an “election out” can be made and the alimony can receive the same tax treatment as child support and property settlement payments (nondeductible to the payer and nontaxable to the payee). Contact us for complete details.



 

  



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