With the IRS tax filing deadline coming up later this month, it is time for recently divorced or soon-to-be divorcing spouses to become acquainted with the tax implications of divorce. While child support payments do not have any tax implications (that is, they are not tax-deductible for the paying parent, and they are not considered taxable income for the receiving parent), spousal maintenance (alimony) payments do. Whether you are paying or receiving spousal maintenance in Illinois, you need to account for it on your taxes.
Spousal Maintenance Is Tax Deductible for the Payor
If you are currently paying spousal maintenance to your ex-spouse, know that these support payments are tax deductible. As such, you may end up being required to pay less taxes than expected. Awareness of such positive tax implications should allow you to better plan your finances, whether you are budgeting in the short-term or saving and investing for the long-term.
Spousal Maintenance Is Taxable Income for the Recipient
If you are currently receiving spousal maintenance from your ex-spouse, know that the support payments constitute taxable income. Because of this, you may end up being required to pay more taxes than expected. Anticipating and accounting for this reality well in advance of the tax filing deadline can help you budget and plan your finances as so to avoid experiencing unexpected and stressful monetary burdens at tax time.
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