Essential Documentation for Alimony Transactions

Maintaining precise records is crucial for both parties involved in the exchanging of alimony, also known as spousal support. This financial obligation arises when one partner provides monetary support to the other after a divorce. Alimony is not a given in all divorce cases; it is generally more prevalent in situations where the marriage has been lengthy, there is a significant disparity in earnings, or one spouse has sacrificed career opportunities for familial responsibilities.

Alimony has significant tax implications—it is deductible for the payer and must be reported as taxable income by the recipient. Therefore, it is vital to keep comprehensive records of all alimony transactions to prevent any disputes or inquiries from the IRS. This documentation is essential to substantiate the amounts of alimony claimed or received in the event of disagreements or audits.

For the Payer

Individuals making alimony payments are advised to meticulously track:

• a ledger detailing each alimony payment, including the date, check number, and recipient’s address
• original checks used for the payment, securely stored (such as in a safe deposit box), with annotations clarifying the corresponding month of support
• signed receipts for each payment made in cash

At James H. Wilson Law Firm, we recommend that you retain these records for a minimum of three years from the filing date of the tax return that includes the alimony deductions. Nevertheless, due to the gravity of these records, some suggest retaining them indefinitely.

For the Recipient

The spouse receiving alimony should also maintain a record of each payment that includes:

• the date the alimony was received
• the payment amount
• identifying information such as check number or money order number
• the account number from which the check is drawn
• the issuing bank’s name or the issuer of the money order
• a photocopy of the check or money order
• any signed receipts provided for cash payments received

Consistent record-keeping is critical, and we at James H. Wilson Law Firm understand the importance of protecting your interests post-divorce. If you require assistance or have any queries regarding alimony payments and record-keeping, do not hesitate to contact us at 804.740.6464 for legal guidance.