If you're paying spousal support, is it possible to have the support taken directly out of your paycheck BEFORE the income is taxed? Or do you have to pay the tax on it now and wait till tax time to regain the lost income? If the second one, should you adjust your withholding now so that you pay less tax up front and get more income up front?
My ex and I currently have a verbal agreement about support because our divorce hasn't gone through yet and won't be final for months. My lawyer, whom I saw only once, told me I should seek a certain amount for a certain length of time. He said it was a fairly standard way of calculating support. From what I've seen elsewhere, this is true. Anyway, my ex agreed to this amount.
I asked my ex if he could have that amount taken directly from his check before taxes. He flat out said no (he didn't bother to find out), so I asked him for a lesser amount (call it X minus Y), with the understanding that Y would have gone to pay taxes anyway. I thought we would be filing jointly for the tax year 2010 and paying our taxes together, so I thought it didn't matter that I wasn't getting Y amount. I planned to renegotiate the arrangement at a later date, once our divorce went through and once I knew more about the legalities of the situation.
Turns out I was wrong; we can't file jointly next year. So I'm getting X minus Y when I'm supposed to be getting just X. So now he says that when he files next year, he's going to claim X as his alimony amount (so he won't have to pay tax on it) and keep Y for himself. But he agreed to pay me Y, and I need Y to pay my taxes next year.
Next time I see him, I need to bring this up again. But I can't afford a lawyer, and I'm not sure how all of this works. I found some info online and discovered that he can't claim any amount as support unless it's part of a court-ordered transaction. Otherwise, any money he gives me is just a gift and is not tax deductible. I guess I could use that knowledge as leverage against him, but I sure as heck don't want to. I also know that if he pays me the full amount up front, he can't afford to pay his own bills. That doesn't seem fair, either. So I figured he could adjust his withholding so he gets more income now. But I don't know what people usually do, and our divorce hasn't even gone through yet.
I suppose at some point I will have to consult one of those storefront legal centers, but I'd rather not do that till I have more information. I'd rather not do it at all, since I need to spend as little as possible right now. What a mess.
