Additionally, properly structured alimony payments can help shift income from a higher tax bracket to a lower one, which provides financial savings to both you and your ex. For instance, suppose your former spouse is in a combined local, state and federal tax bracket of 40%, while your combined bracket is 30%. By shifting income from your ex-spouse’s tax return to yours, the taxes on that income would be reduced by the difference in your tax brackets, or 10%.
You and your former spouse can also decide that you want alimony payments to neither be taxable as income or deductible. This is permissible, so long as the benefit is reciprocal (both non-taxable and non-deductible) and clearly stated in your court ordered settlement agreement or final judgment of divorce.
If you are considering divorce and are concerned about the tax consequences of structured alimony and/or child support payments or you have any other family law issue, you should speak with a qualified family law attorney at the DiPietro Family Law Group. Our attorneys can review the facts of your specific situation and will fight for your rights and the outcome you desire. We have decades of experience representing clients in all types of family law issues and are here to help you!
Call us today to schedule a consultation at (703) 370-5555 or visit us online.