How is Alimony Taxed

When a person receives an alimony award, usually the obligor can take a tax deduction for the payments to the obligee and the obligee must treat the payments as income, for which there are tax consequences. Basically if you pay alimony you receive a tax benefit, and if you receive it you have to pay taxes on it. This is a confusing concept for some, and its important to properly plan for alimony tax consequences so that when tax time comes around you aren't left with a huge tax liability. If you are concerned about your ability to pay quarterly taxes on your alimony, you may want to think of other ways to satisfy your needs like taking an asset in lieu of alimony or taking a lump sum payment at the conclusion of your divorce. There are creative ways to minimize your tax liability both from a obligor and obligee standpoint. You should speak with your lawyer about your concerns so that they are addressed before the conclusion of your dissolution.

If you would like to read more about alimony, please see: http://www.divorcenet.com/states/pennsylvania/is_alimony_tax_deductible