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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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Going through a divorce. Trying to settle and I am proposing

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Going through a divorce. Trying to settle and I am proposing that my wife receive a percentage of my work bonus for X number of years. Is there any tax implications I should consider? Thanks.

Lev :

Hi and welcome to our site!
Possible tax implication might be if such payments are classified as alimony or not.
However - for payments - to be treated as alimony - please see IRS pub 504 - www.irs.gov/pub/irs-pdf/p504.pdf
Alimony Requirements. A payment to or for a spouse under a divorce or separation instrument is alimony if the spouses do not file a joint return with each other and all the following requirements are met.
-- The payment is in cash.
-- The instrument does not designate the payment as not alimony.
-- The spouses are not members of the same household at the time the payments are made. This requirement applies only if the spouses are legally separated under a decree of divorce or separate maintenance.
-- There is no liability to make any payment (in cash or property) after the death of the recipient spouse.
-- The payment is not treated as child support.

Lev :

Spousal maintenance payments are generally classified as an alimony - and as such are deductible for the payer and are taxable for the recipient. That is regardless from which sources alimony is paid.
Here is a law section - http://www.law.cornell.edu/uscode/text/26/61
which specifically includes alimony into gross income definition.

Customer:

thanks, XXXXX XXXXX do I do next? Can I pull this for reference later?

Lev :

Yes - you may come back to this page ANY time.
Here is the address - http://www.justanswer.com/tax/829an-going-divorce-trying-settle-proposing.html

Lev :

You may print this information and provide to your divorce attorney to be sure all requirements are reflected in your divorce agreement.

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