Avoid mistakes when claiming alimony post- divorce

Few things are less appealing than going through a divorce. Filing one’s taxes, however, can come in a close second. For Maryland couples who are still in the midst of divorce or who have recently finalized the end of their marriage, tax matters can become complicated. Avoiding mistakes is key for those who wish to prevent an audit. The manner in which alimony is claimed on one’s tax return is one of the leading causes of red flags at the Internal Revenue Service.

The spouse who pays alimony can claim the expense as a deduction on his or her tax return. The receiving spouse is not taxed on alimony, but must state the amount of payments received on their tax return. When these numbers differ on the two returns, the IRS will often take a closer look at the discrepancy.

The reason that divorced spouses often claim different amounts of alimony lies in how the total amount paid is calculated. The receiving spouse often simply tallies the monthly payments received and submits that figure. The paying spouse will often include additional expenses paid to support the receiving spouse, such as the cost of insurance, medical bills and so on.

Regardless of how the figures were reached, any discrepancy between the amount claimed by each individual can trigger an audit, which can be stressful and expensive. The best way to avoid this scenario is to work together to ensure that both tax returns are properly completed and filed. For those Maryland couples who are uncomfortable communicating with one another directly during or after a divorce, it is possible to hire a tax professional to complete the returns, which can ensure compliance with all applicable tax codes.

Source: The Buffalo News, Communication is key for estranged couples at tax time, Tim Grant, Feb. 3, 2014

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