There are tax consequences for both paying alimony and receiving alimony. Payers of alimony usually get to deduct the payments on their tax returns. Recipients of alimony, on the other hand, generally must include the payments in their total gross income. As with nearly all tax matters, alimony payers and recipients will want to keep written records to show to tax authorities if the authorities start asking questions. This blog post will go into a bit of detail as to what documents should be retained by alimony recipients and payers in Boulder County.
A recipient will want to keep records in case the tax authorities suspect the recipient underreported the amount of income they received as alimony. For each payment, a recipient should record the date the payment was received; the amount received; and the check number, checking account number and bank name if the payment was made with a check. The recipient should also make and keep a copy of the check or money order. If the payment was made in cash and a written receipt was given, a copy of that receipt should also be made and kept.
A payer will want to keep records in case the tax authorities suspect the payer paid less in maintenance than they are claiming as a deduction. Payers should keep records similar to those recommended for recipients: the date and amount of each payment; copies of any checks used to make payments; and written receipts of cash payments.
These records will also come in handy if the recipient believes they didn’t get the full payment they were entitled to. Keeping good financial records can be worthwhile when dealing with the tax authorities or the family law court.
Source: FindLaw, “Alimony Guidelines: What Records to Keep Regarding Your Alimony,” accessed on Jan. 6, 2017