Did I just read that right? Is that what you are thinking? I should actually want to pay alimony? I have always thought that I should fight paying alimony. Was I right?
So, if there is one thing I know, it is that the emotions of people going through a divorce are real, raw and often difficult to reduce, especially at the beginning stages of the process when emotions run so high.
During this same period of time, the divorce attorney is recommending that I pay alimony, as well as the mortgage on the family home.
You did hear me correctly. I am a strong advocate for making every effort to remove, reduce or avoid the emotions of divorce, at least just long enough for your highly experienced Howard County divorce attorney to assist you in helping your bottom line.
Let’s take a brief snapshot of the effect of paying both alimony and a mortgage during and after the divorce process.
First, alimony is tax deductible to you, and equally important, alimony is taxable to the recipient. Child support is neutral. It is neither taxable nor deductible. So, when you pay $1000 per month of alimony, depending upon your tax bracket, you could be saving up to 30% of what you pay. Put another way, the effect of your paying $1000 per month in alimony is a net payment of $700 per month.
How do you take advantage of the deduction in real time? A couple of ways quickly come to mind. First, you could re-adjust your tax withholdings on your pay to increase your net pay based on the savings yielded by the deduction. Second, you could wait until the end of the year and get a larger refund from the IRS (or pay a smaller tax, depending on your personal situation).
A highly experienced CPA, tax attorney or tax preparer can easily provide you with the information needed to make these adjustments.
Payment of interest on a mortgage may also be deductible. You should likewise contact a CPA, tax attorney or tax preparer to explain to you the information they need to determine your ability to make such deductions.
Divorce is expensive. Figuring out how much to pay in alimony can be incredibly involved, emotional, messy, etc… Take advantage of each and every avenue for reducing your expenses.
Divorce is a great time for a lifestyle evaluation and change, financially. Re-learn everything you thought you knew, and you will be just fine!