Alimony can be one of the biggest sources of contention for couples pursuing divorce and even after divorce, the disputes can live on. Was the payment on time? Did the payment cover the amount it should have? And, most commonly, were records of the payments kept for tax purposes?
Whether you're the paying spouse or the recipient, alimony will have an impact on your taxes and failing to keep proper records can damage tax deductibles and taxable incomes.
When alimony is involved after a divorce, the IRS pays special attention to the way you file your taxes. If you don't record every payment that was made, you may have to prove later on that you did indeed pay the amount you were supposed to in a timely manner.
Documentation for Both Parties Involved
The person paying alimony is responsible for keeping key documents that will affect the ultimate outcome of their taxes.
These documents include all of the following:
- A list showing the details of each payment, including the date and check number
- The originals of the checks you paid with the month notated on the back
- Receipts for any payments paid in cash
All of this documentation should be kept for at least three years from the date of the respective payment. To completely cover your bases, a good rule of thumb is to refrain from ever throwing away the records.
The person who is receiving the alimony payments should keep a detailed list of every payment received.
The list should incorporate:
- The date of the payment
- The amount received
- The check number
- A photocopy of the check
- The account number on the check
- The name of the bank involved
- A copy of signed receipts for cash payments
Even the smallest error can impact the outcome of your filed taxes. Our Riverside divorce attorney Robert Deller can ensure that you correctly record the details of your alimony payments – call today for your free case evaluation!