Sometimes known as alimony, spousal support is typically treated as taxable income to the recipient and tax deductible for the payor. To get a clear picture of what you’ll be receiving or paying, you will have to factor in the taxes/tax deductions for the spousal support. If you’re the payor, you need to know what the actual out-of-pocket cost (the amount less tax deductions) will be to you; if you’re the recipient, you need to figure out what the net amount (the gross amount less taxes) that you’ll be receiving. To learn about how spousal support works see How Spousal Support (Alimony) Works. For information about how to insure spousal support payments, see How to Protect Spousal Support (Alimony) Payments.
About Diana Shepherd, CDFA®
Diana Shepherd is the Editorial Director and Co-Founder of Divorce Magazine. An award-winning editor, published author, and a nationally-recognized expert on divorce, remarriage, finance, and stepfamily issues, she is a frequent lecturer on the topics of divorce, finance, and marketing – both to local groups and national organizations. She is the co-author of The IDFA Survival Guide, a book designed to help divorcing couples avoid the common pitfalls and make better decisions, and the co-author, editor, and designer of nine textbooks and resource guides for financial professionals. She holds the Certified Divorce Financial Analyst® (CDFA®) designation from the Institute for Divorce Financial Analysts and an Honours English Specialist degree from the University of Toronto.