Alimony in Tennessee – 3 Tips on IRS Changes

Alimony in Tennessee – 3 Tips on IRS Changes

Alimony in Tennessee is changing

A recent article in the Journal of Accountancy warned us that the IRS is increasing audits on tax returns that include alimony or “spousal support.”  Alimony in Tennessee divorces is no exception. You may or may not know that, unlike Child Support, Spousal Support is tax deductible by the person PAYING support and it is counted as income to the person RECEIVING support.

We have 3 tips about Alimony in Tennessee for you to keep in mind when filing your Tax Returns:

(1) Clear Language 

Make sure you understand what is written in your Marital Dissolution Agreement (MDA). Most MDA’s are written in legal language that can be hard to understand. The amount of spousal support should be clearly spelled out. Then, there is no argument about what portion of your assets is the dividing of current money you already have and what amount is to be paid out each year and classified as spousal support.

(2) No Discrepancies!

Make sure you and your former spouse are both putting the same amount of alimony in Tennessee on your tax returns. Discrepancies can cause an expensive audit for both of you.  If you are using a formula or a percentage of income, be sure to tell your Ex the amount you paid,  Next, put it in writing. This should be done well in advance of the filing date, just in case you disagree. Finally, we tell our clients to send that letter be sent by February 15 each year.

(3) Professional Support

Make sure to hire a tax professional if you have doubt about how to fill out your return – especially the first couple of years. When in doubt, be conservative.  Lastly, do not let a risky or inaccurate claim flag your tax return for an expensive and stressful audit of your alimony.

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