Filing for an Alimony Adjustment in Your Withholding Tax

In almost all of life’s changes, the IRS will make sure that it is part of it. Whether you get married, get divorced, give birth, get a new job, buy a house or purchase an energy-efficient car, you will always have tax implications for these actions. The effects of alimony on your withholding tax and the forms of IRS assistance on this matter will be discussed in this write-up.

Paying federal income taxes can be done through any of the two: estimated tax or withholding tax. The self-employed usually utilize the estimated tax. “Estimated tax is used to pay not only income tax, but self-employment tax and alternative minimum tax as well,” describes the IRS. Withholding tax, however is most useful to employees, where their respective employers automatically take a certain chunk of their salaries as income tax. Whether taxes are taken from your job or other types of income like pensions, gambling winnings, bonuses and commission, they will always be reflected under your name.

How much you make and specific data in your W-4 influence the amount that is withheld from your pay. The latter includes details on whether you are withholding at the single rate or the lesser married rate, how many withholding allowances you can claim, and whether you want any additional income withheld. For assistance in the estimation of your withholdings, you can use the Withholding Calculator.

Alimony adjustment, among others, is one way of changing your withholdings. How should you go about this method? You can simply accomplish a new W-4 and submit it to your employer to avail of adjustments in your withholding taxes.

Alimony payments are taxable, hence tax reduction can’t be a result of such form of income. If are receiving these, it is a good idea to accomplish a new W-4 to effect an increase in your income. If you do this, you do not end up owing more taxes at the end of the year.

On the other hand, being the one to pay for the alimony entitles you for a tax deduction. But, it should be paid through the following: in cash, through a check or through money order. Arrangements like directly paying certain bills for an ex-spouse are not considered alimony. A newly accomplished W4 is sufficient to record requests for tax deductions gained from paying alimony.

Your life changes ---- and some circumstances change more drastically in the course of a year. When they do come your way, don’t forget to adjust the amount of income you have withheld from your pay.