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How Alimony and Taxes work together
Anytime you are going through a divorce, there will be some form of financial discussion. For those that are in the area, a Brighton Beach divorce lawyer will help to provide its client with the best settlement possible when it comes to splitting assets and payment of alimony or child support. If there is ongoing financial consideration to be paid from one party to the other, it is important to understand the tax implications. Alimony can affect your tax liability in different ways based on whether you are paying or receiving it.
Tax Impact on Payer of Alimony
If you have been deemed responsible to make ongoing alimony payments to your former spouse, it can have a positive impact on your taxes. The alimony that you pay out will be fully tax-deductible, which will reduce your taxable income and tax liability. This form of deduction differs from other deductions as it can be deducted whether you itemize your taxes or not. This way, you will receive the tax benefit even if you plan to take the standard deduction each year.
Tax Impact on Recipient of Alimony
While alimony payments are considered a deduction to the payer, they will be considered taxable income to the recipient. When filling out your federal tax return, alimony payments will be viewed similar to other forms of compensation. Any dollar amount that is received in alimony will increase your income and annual tax payment.
Alimony can have a big impact on your finances and tax liability. If you are going through a divorce in the area, Brighton Beach and Brooklyn divorce lawyers can help you understand the full impact of any financial settlement or judgment. If you are looking for a Brooklyn or Brighton Beach family lawyer, you should reach out to the Levitsky Law Firm. This firm can provide you with proper consultation and legal support to ensure that your rights are properly represented.