Alabama residents who are considering divorce may want to be aware of a pitfall relating to tax deductions. The U.S. Tax Court recently denied a man’s alimony payments that were deducted in 2008. Although his divorce decree stated that the alimony could be deducted and that his wife should report the received payments as income on her tax returns, the termination contingency on the divorce decree invalidated that stipulation. According to the man’s divorce decree, he had to pay a specific amount in alimony per month. His ex-wife was also eligible for a 40 percent portion of his bonus. It was stipulated in the decree that these payments would both terminate in the event of the ex-wife’s remarriage or the demise of either one of the two parties. However, the first termination condition on the decree stated that payments would be cancelled when the youngest child reaches high school graduation. … Continue reading Alabama couples to avoid contingency pitfalls in alimony
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Alimony payments may be considered tax deductible
Although many people might not know exactly what to expect when deciding to file for divorce, it will certainly provide lifestyle adjustments. Of course, couples can work together to ease that transition for themselves and any children involved in the split. Some people may consider requesting alimony payments as part of a financial settlement. Spousal support in this form isn’t a mandatory aspect of divorce, but it can help ease some financial difficulties created by divorce. For example, one spouse may have a much higher income than the other. During marriage, both individuals become accustomed to the lifestyle associated with sharing income, so alimony payments can help balance out changes caused by living with a single income. Of course, before drawing any conclusions about a divorce settlement, it can be helpful to be aware of the ramifications for specific decisions. When couples reach an alimony agreement, for example, they may … Continue reading Alimony payments may be considered tax deductible →
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Is it time for alimony reform in Alabama?
For quite some time, alimony has been included in divorce settlement as a means to help balance some financial inequities in the wake of divorce. If one spouse earns significantly more than the other, the one who has the higher income may be required to make monthly payments indefinitely. Some have pointed out that the way alimony is currently structured in most states is based on family dynamics that are no longer the norm. This is why people throughout the country have pushed for family law reforms, which often includes putting an end to lifetime alimony as a standard practice. As this conversation continues, many may be wondering whether or not changes should come to Alabama state law. As of March 2012, Massachusetts’ alimony laws changed, reflecting a number of reforms. Although the law has been in effect for less than two years, proponents of change say that this particular … Continue reading Is it time for alimony reform in Alabama? →
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