What Are The Tax Consequences Of Alimony For A Pasco County, Florida Resident?
It’s critical that if you are paying or receiving alimony in Florida that you understand the income tax consequences of alimony. Income taxes can often be overlooked as an issue in alimony, but they can make a huge difference to the payer and the recipient.
In Florida, alimony payment is treated as taxable income to the person who receives it, and it is tax deductible to the spouse who pays it. For example, if you are awarded $2,000 a month in alimony, and that puts you in a 20 percent tax bracket, you will pay $400 per month in taxes.
Therefore, you will only actually have $1,600 to spend. When you are negotiating alimony payments, if you are planning on receiving $2,000 a month to spend, you must actually be awarded more than that after taxes are taken into account. If you are receiving alimony, and you don’t report it, it’s likely you will get audited.
Your former spouse will take a tax deduction for the alimony paid, and will list your social security number as the recipient of the alimony. Therefore, if you don’t report it, your tax return will most likely be flagged and you will be audited.
Alimony is deductible by the person paying it. Therefore, if an individual makes $75,000 per year, and pays $25,000 in alimony, his or her taxable income is $50,000. The alimony payments will most likely put the payer into a lower income tax bracket.
Child support is treated differently than alimony for tax purposes. Child support is neither deductible by the person paying it, nor taxable to the person receiving it.