Tax Effects
Periodic alimony payments are usually taxable to the
recipient and tax-deductible by the payer. Couples can sometimes take advantage
of this situation by structuring alimony payments to create the best possible
tax scenario for both spouses. The IRS generally treats lump-sum payments as
property distributions even if the court or the couple refers to the payment as
alimony. Under these circumstances there would be no tax effects for either
spouse.
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