An important but frequently overlooked issue in New Hampshire divorce cases is the tax consequences to both parties once the divorce is final.
Tax Treatment of Alimony Payments
The tax treatment of alimony payments in New Hampshire in governed by federal law, more specifically the Internal Revenue Code. Generally speaking, alimony is taxable to the person receiving it, and deductible to the person paying it.
The Internal Revenue Code lists the factors which must be present in order for a payment to be considered alimony.
In order to qualify as alimony, the payment must be:
- in cash;
- received under a divorce or separation instrument;
- not designated under the divorce or separation instrument as something other than alimony;
- made when the individuals are no longer members of the same household;
- terminated at the death of the spouse who receives the payment;
Under certain circumstances, payments made on behalf of a spouse will be considered alimony, such as mortgage payments, car payments and the like.
Call the T.W. Stevens Law Firm today at (603) 749-6400 and we’ll help you understand the possible tax consequences of your NH divorce.
The T.W. Stevens Law Firm of Dover, NH represents individuals and families throughout Strafford and the surrounding New Hampshire counties. Our primary areas of practice are divorce, child custody, and estate planning.