It is getting close to tax time. Is your alimony payment deductible? Here are guidelines based on your employment or self employment.
Alimony Payment Decreases
To prevent taxpayers from disguising non-deductible property settlements as disguised alimony, the Internal Revenue Code sets up certain rules for the first three years of alimony payments. If your alimony payment decreases significantly in the first three payments, the IRS will recapture some of it and disallow the deduction.
Test Your Alimony Settlement
Of course if you are receiving alimony based on your divorce decree, that may be a good thing because part of your alimony will not be taxed as income. The rules are hopelessly complex, but you can test your alimony settlement easily with this alimony recapture calculator.