Alimony is another word for spousal support, and most states allow this type of support to a certain extent. If you are awarded with alimony during your divorce, it is important for you to understand how this money is viewed in terms of income. Here are several things to know as you begin receiving your alimony payments.
It is taxable income
Alimony, unlike child support, is considered taxable income by the IRS. When you receive alimony payments, you will have to record them on your taxes as income. To record this, you will have to fill out Line 11 on a Form 1040 with the total amount of alimony you received during the year.
In addition, you will need to make sure your ex-spouse has your social security number (SSN). He or she will need this because the payments made to you are tax-deductible for your ex-spouse, and your ex must include your SSN on his or her tax return in order to write off the alimony paid.
One thing you should realize is that alimony is not the same thing as child support, and child support payments you receive are not considered income by the IRS.
It is considered income for Medicaid
If you need to apply to Medicaid for insurance for you or your children, you must meet the income requirements in order to qualify. When you fill out these forms, it will ask you about the forms of income you have. If you currently receive alimony, you will need to include the amount you receive as part of your income. This will cause your income to increase, which may make it harder for you to qualify for governmental benefits like this.
It is considered income for loans
Alimony is considered income for almost all purposes, and while this may not be beneficial in some ways, it can be in others. The main way it can benefit you is by allowing you to claim your alimony payments as income on loan applications.
If you want to apply for a credit card, car loan, or mortgage, adding your alimony payments to your income could boost it high enough for you to qualify for these things. In this situation, reporting alimony as income is a good thing.
Collecting alimony can be helpful after a divorce, but it can also affect certain things in your life, such as your taxes. If you have any questions about this, contact a divorce lawyer today.Share