Tax Tip of the Week*

ALIMONY, THINKING OUT OF THE BOX

Alimony is almost always thought of as being deductible by the one making the payments, and taxable to the one receiving it. Indeed, that is typically and almost always the case. However, the tax laws give you an opportunity involving alimony that exists almost nowhere else in the tax laws – and that is to make a determination in advance as to whether or not you want that alimony to be taxable (and deductible). In certain limited circumstances, it may be to everyone’s advantage to make the alimony tax free to the recipient and non-deductible to the one making the payments. This truly involves some creative tax planning, but it is very relevant and apropos in some situations.