Q:

How do you calculate alimony tax?

A:

Quick Answer

The taxpayer includes alimony received as income on line 11 in Form 1040 in order to include it in the tax calculations, states the Internal Revenue Service. She cannot use Form 1040EZ for reporting alimony income.

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How do you calculate alimony tax?
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Full Answer

There are rules to determine which payments are included as alimony income. Cash payments, including checks and money orders, paid directly to the taxpayer qualify as alimony. Alimony includes payments to a third party, if the taxpayer makes a written request stating that the payment is treated as alimony. It includes life insurance premiums that a former spouse must pay under the divorce or separation instrument, for a policy on his life owned by the taxpayer. If he is required to make all the mortgage payments on a jointly owned home, she includes half of that amount as alimony received, notes the IRS.

Services and property do not count as alimony. Alimony does not include a payment designated as child support or a voluntary payment that is not made under a divorce or separation instrument. The taxpayer must provide the Social Security number or the individual tax identification number of the person who paid the alimony. If she does not, she may pay $50 in penalty, explains the IRS.

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