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January 25, 2008, Newsletter Issue #99: Paying Alimony
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Tip of the Week
Because of the tax advantages of labeling payments to a soon-to-be former spouse as alimony rather than child support, beware of the temptation to propose paying more alimony than would normally be ordered to take advantage of this benefit. The IRS has addressed this very issue and has some very strong words to say about either "front-loading" alimony or paying a large sum in alimony the first couple of years and having it taper off after that or simply paying excess alimony in general. The courts and IRS have said that because of the tax ramifications to the recipient, if the amount of alimony front loading or excessive alimony is more like a property settlement only benefitting the payor in excess proportions.
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