During a divorce, one of the many issues that have to be addressed involves spousal support. Normally, a judge will decide who is responsible for making support payments and who should receive them based on whoever earns the most income. By ordering one spouse to pay the other support, the courts are balancing the economic scales between the couple. This gives the partner who is facing a financial disadvantage from the divorce an opportunity to build a new life. According to a Spousal Support Attorney in South Bay CA, no matter who is paying and who is receiving, both parties will need to keep detailed records of support payments for tax purposes.
Here is a guide for keeping track:
Records to Keep if Paying
Spousal support is tax deductible for the individual making the payments. Therefore, it’s important to maintain detailed records of all payments made throughout the year. Keep a log of the check numbers for each payment made, the address where the checks were mailed, photocopies of the canceled checks, and receipts for any cash support payments that are made. This documentation will prevent problems with the IRS in the event any of the deductions are questioned.
Records to Keep if Receiving
It is just as important for those receiving spousal support after a divorce to keep a detailed record. Keep in mind, this has to be reported as income on this person’s tax return. Recipients should maintain records that include every payment amount received, the date it was received, the check or money order number for payment, the account number and name of the bank the money was drawn on, and photocopies of all of the checks received or receipts signed for cash payment.
According to the IRS, it’s a good practice to retain all records for at least three years in order to provide proof in a situation where an audit takes place. If there is any potential that an ex-spouse could make false allegations about support payments in the future, everything should be kept organized and filed away permanently.
Those in need of some guidance from a Spousal Support Attorney in South Bay CA can turn to Shook & Associates Inc. Browse the website today. The team here is dedicated to obtaining the best possible outcome for a family. Receive the one on one attention that you deserve by calling today for a free consultation.