Getting Divorced? 5 Tax Tips You Need to Know

By Angela McIlveen

Each year tax season brings with it new law, new questions, and new decisions. Adding a divorce or separation in the mix makes things even more complicated. Here are 5 tax implications to consider:

1. Did you receive or make alimony payments in 2011? You may deduct from income the amount of alimony or separate maintenance you paid, and you must include in income the amount of alimony or separate maintenance you received. The IRS does not limit what you report as alimony to only amounts that you designate as alimony. Noncash property settlements, whether in a lump sum or installments, do not qualify as alimony. Voluntary payments (i.e., payments not required by a divorce decree or separation instrument) do not qualify as alimony. Review topic 452 on the IRS.gov website.

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