ARIZONA Part 81

Tax Effects

Periodic maintenance payments are usually taxable to the recipient and tax-deductible by the payer. Couples can sometimes take advantage of this situation by structuring 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 maintenance or alimony. Under these circumstances there would be no tax effects for either spouse.