Advantage of Marriage Filing Separately & Alimony
The Internal Revenue Service offers married taxpayers a variety of benefits for filing joint tax returns. In most cases, married couples receive more tax benefits from filing jointly than from filing separately. However, in the case of a married couple where one spouse pays alimony, it may benefit the couple to file separately.
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Dealing With Alimony
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If you separated from your spouse and you make or receive alimony payments, these payments will affect your tax liability. How the alimony payment affects your taxes will depend on whether you pay or receive the alimony. If you make alimony payments, then alimony will qualify as a tax deduction on your tax return. However, if you receive alimony payments, you must claim these payments as taxable income on your tax return. Because both the person making and receiving alimony payments report the payments to the IRS, you must accurately report alimony on your tax return.
Choosing to File Separately
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In cases where you informally separated from your spouse, the IRS allows you and your spouse to file a joint return if both parties choose to do so. However, once you legally separate from your spouse, the IRS requires you to file separate tax returns. Some tax benefits may result from filing separately. The IRS imposes several limits to deductions and credits you can claim if you file jointly as a married couple.
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Deducting Alimony
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Your filing status may directly affect the tax deduction or tax liability to that results from the alimony payments you make or receive. This deduction or liability will depend on whether you pay or receive the alimony. If you make alimony payments, you may claim these payments as a deduction so long as you file separate returns from your spouse. If you file jointly, however, you cannot claim any deduction for alimony payments made. Depending on the amount of alimony involved, this deduction can significantly impact your overall tax liability.
Avoiding Joint and Several Liability
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Married couples that file joint tax returns also assume joint and severable liability for any tax, interest and penalties owed to the IRS. This means that both parties assume full liability together and individually for the tax debt. This joint and severable liability, however only applies in cases where you file a joint return with your spouse. Therefore, filing separately not only allows you to deduct alimony payments, but also can prevent assuming liability for a spouse’s tax debt.
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