Payments made Incident to a Divorce

Payments made Incident to a Divorce - Fall 2011 Payments...

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Fall 2011 Payments made Incident to a Divorce Three different types of payment often happen in the case of a divorce: property settlements, child support and alimony. We mentioned in an earlier class that alimony paid to an ex-spouse is permitted to be deducted by the person who paid it as a deduction for (that is, in order to arrive at AGI). The person who receives the alimony must include it in gross income. In claiming this deduction the IRS requests the social security number of the person to whom alimony is paid to make sure that the ex-spouse who receives alimony includes this amount in gross income. 1 We also previously mentioned that child support payments, in contrast to alimony, are nondeductible. Child support payments are not included in the gross income of the recipient. Our textbook on page 6-35 provides the following in regards to property settlements: “The division of the property (i.e. the transfer of property from one spouse to the other in exchanges form the release of that spouse’s marital claim) is a nontaxable
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Payments made Incident to a Divorce - Fall 2011 Payments...

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