Alimony payments are tax deductible to the paying spouse, and taxable to the receiving spouse because spousal support payments are viewed by the government as income. If your are the supported spouse, take time during negotiations to run numbers through various tax implications to see how support payments will affect your tax bracket and taxes due.
If the proposed alimony amount pushes you into a higher tax bracket, consider swapping some percentage of alimony for non-taxable alternatives, such as having the paying spouse make payments directly toward expenses such as certain home upkeep-related expenses. When in doubt, your tax attorney can work with your accountant or your financial planner to walk you through different tax scenarios. This information will help you choose the best alimony settlement option for you.
Bari Zell Weinberger is the owner and managing partner of Weinberger Law Group in New Jersey. She is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney.