It is very important to keep track of alimony payments in the event that there is a disagreement between the two parties. The spouse receiving alimony may make a claim in court that the spouse paying alimony has not been doing so, and the payer may be sued for back support. In addition, the IRS may challenge alimony payments that were made or received, and the payer may lose the alimony tax deduction.
In order to avoid these situations, the spouse paying alimony should:
- Keep a list of all payments with the date, check number, and address to which the alimony payment was sent.
- Keep the original checks in a safe place, such as a safe deposit box.
- Keep a receipt signed by the recipient if alimony was paid in cash.
- Consult a divorce lawyer
The spouse receiving alimony should:
- Keep a list of all payments received with the date, amount received, check number, account number of the check, and name of the bank the check is drawn from.
- Keep a photocopy of each check or money order.
- Keep a copy of the receipts if alimony was paid in cash.
Alimony Recapture Calculators
Because alimony payments are frequently tax deductible, the government has a way of making sure alimony is not being used to disguise property settlements. If alimony payments decline by more than $15,000 dollars over the first three years, the payer will be subject to alimony recapture. This means that a portion of claimed tax deductions have to be repaid. In order to avoid recapture, you can either use an alimony calculator to figure out an appropriate payment structure or consult a knowledgeable divorce lawyer.