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How alimony may affect taxes

Spousal maintenance is often a part of a Texas divorce decree. Couples may not realize that alimony may affect their taxes depending on how it is referred to in the order. Alimony may be considered taxable income for the recipient, and it may be tax deductible by the payer.

The divorce between Johnny Depp and Amber Heard has made headlines not just due to their celebrity status but because of an interesting situation regarding alimony. According to one report, Depp's one-time alimony payment was sent directly to charity as a donation. This would mean that the payment was tax deductible for Depp. Considering his income and the amount of alimony, this could cut the amount of 2016 taxes he will owe by a significant amount.

There are potential problems, however, that could still make the money taxable to Heard. The wording of the divorce decree governs the taxation of alimony regardless of what is actually done with the money. If the divorce decree states that the alimony was to be a cash payment to Heard, then she could pay taxes on the money even if she never received it. It would not matter that she requested it be donated or would have done the donation herself anyway. Since Depp actually performed the donation, it is only deductible for him.

While the dollar amounts are noticeable in the case of this wealthy celebrity couple, the lesson from their situation could apply to anyone. The exact wording of a divorce decree is important, and it may govern whether alimony is tax deductible or not, regardless of what is actually done with the money. Family law attorneys can often assist in inserting the appropriate language that will be of the most benefit to their clients in this regard.

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