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Tips for record keeping regarding alimony

Alimony payments carry unique tax issues that require that you keep excellent records should you ever be audited. Essentially, alimony payments, or "spousal support" payments, are given by one spouse to another following a divorce. Usually, alimony is ordered when one spouse significantly out-earns the other. These payments are the court's way of balancing the economic scales between the parties, which allows the disadvantaged spouse time to build up a new life.

Alimony payments are subject to somewhat complicated tax treatment. The basic rule is that it is excluded from your income and included on your ex-spouses.

There are some special forms you must fill out; if you have these questions, it might be helpful to consult an expert. Generally, you should not need to produce any records of your alimony payments. These documents are kept only in the event of a state or federal audit of your income. It is recommended that you keep copies or originals of the following:

  • Signed receipts for any alimony payments made in cash, or equivalent.
  • Copies of the check or electronic transfer of the payment. It is also helpful to include a sentence or two regarding the purpose of the payment.
  • Finally, keep an up-to-date ledger for every payment.

Conversely, if you are receiving spousal support, then you will need records detailing how much you received and when. Specifically, you should ensure to keep the following information handy:

  • A copy of the payment with the name of the bank.
  • A copy of any receipt you signed acknowledging your acceptance.
  • A ledger noting the amount and date received, the account number from which the payment came and the identifying number for the payment that is usually a check number or wire transfer number.

Regardless, if you pay alimony or receive it, it is probably a good idea to keep records. If you are considering or undergoing a divorce, then you may want to speak with a family law attorney to go over your rights. It is better for you to have these records and not need them than to need them and not have them.

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Aaron & Aaron
133 Thomas Green Blvd, Suite 202
Clemson, SC 29631

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