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How does spousal support affect a tax return?

| Mar 12, 2021 | Spousal Support |

Tax season is here once again, and many people in West Virginia may have questions about their returns. Some of the more common questions relate to spousal support or alimony payments. Just a couple of years ago, changes to the Internal Revenue Code impacted whether divorced spouses could include these payments on their tax returns. These changes are still in effect this year, so it may be worth revisiting exactly how spousal support might affect one’s taxes.

New guidelines may not apply

Prior to 2019, those who paid spousal support could deduct it on their taxes, while those who received it had to report it as income. The passage of the Tax Cuts and Jobs Act of 2017 changed both of those provisions, but people who divorced before 2019 still follow those older laws. If the divorce happened in 2019 or later, the new rules apply, so payers cannot count it as a deduction and recipients do not count it as income.

However, just because people divorced before 2019 can still include alimony on their tax return, there are other qualifications for doing so. The individual has to file his or her own separate return and the payments have to be in some form of cash, including money orders and checks. The payments have to be specifically designated as spousal support in a divorce or separation agreement and the payments must have occurred when the two spouses were in different households. There are a few other parameters to be met, which means many people may want professional assistance to ensure they are following tax laws, such as a financial advisor or accountant.

Questions about adhering to the law?

Those in West Virginia who have questions about spousal support agreements have another potential resource to consult — an attorney who specializes in family law. An attorney can help those who want to feel certain that their divorce agreement follows the tax code and treats all parties in the agreement with fairness. The long-term savings may make a significant difference for a person’s future.