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I provide experienced legal guidance in family law, divorce and special education law. I represent parents and families throughout western Massachusetts.

Alimony could have various tax consequences in Massachusetts

For divorced individuals in Massachusetts, understanding alimony may be an issue that they have already covered. However, making and receiving such payments can have tax consequences that they may be a bit more uncertain about. Because making payments can reduce a person’s income and receiving payments can increase it, it is important to understand what that could mean for taxes.

Surprisingly, the amount listed as received for a certain tax year may not always match that which the payer listed as having paid. This discrepancy could occur for different reasons, one of which could have to do with the time that the payments were made and received. If an individual makes a payment during the last few days of a year and the recipient does not receive it until after the first of the new year, the recipient may not report that income until the next year.

The agreements of a divorce can also play a role in how alimony is considered for taxes. Certain payments may have been determined to be non-deductible. In that case, a recipient may not be taxed for it and a payer may not deduct the payments. However, there are several qualifications that must be met before alimony can be deductible, and cases can vary.

Parties who are concerned about the tax consequences of alimony may wish to double-check that they are filing correctly. Because agreements made during divorce proceedings can play a role in how alimony is affected, being knowledgeable about how to make the best agreements can be prudent. Gaining information on alimony and related tax issues in Massachusetts could be a good starting point.

Source: Forbes, "How Much Of Alimony Tax Gap Is From Gaming The System?", Peter J Reilly, May 15, 2014

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