Alimony tax

[happygirl]

Hi everyone. I haven't posted in ages, but have been a constant lurker. I'm about to be divorced and have a question about alimony. I don't work outside the home so for now, alimony would be my only income. I know I'll have to pay taxes on it, but for the life of me, I can't figure out how much they will be. I thought I had it figured out, then I wasn't so sure and I know there are lots of financially adept people here so I'm looking for help.

If the payment is 3000$ per month and I live in Maryland, can someone figure how much my taxes will be? I really appreciate the help. I'm sure I'll have other questions over the next few weeks about retirement, going back to work, insurance and budgeting. Right now I'm just trying to keep myself together, as this was not expected. Thank you in advance.

I'm determined to keep being a happy girl!

[happygirl]

I should add that I have no dependents so I will be single. I know I should be able to figure this out on my own and I have tried, but to be honest, I'm not trusting myself too much at the moment. Divorce hurts and I didn't see this coming.

[doingitallwrong]

Sorry about the unexpected divorce.

Very basic and simplified -- if your only income is the alimony, you'll have $36,000 gross per year, which will also be your adjusted gross income. (This assumes no bank interest, investment income, etc.) For 2015 on the federal return, you get a personal exemption of $4,000 and a standard deduction of $6,300, which brings your taxable income down to $25,700. (If you'll have mortgage interest and property taxes, you might qualify for a higher amount of itemized deductions.) This would result in a tax of $3,664. For Maryland, your AGI is $36,000, you get a personal exemption of $3,200 and an itemized deduction of $2,000. This brings your taxable income to $30,800, resulting in a tax of $1,412. So, total tax of $5,076.

Usual disclaimers apply. I am a tax preparer but not in Maryland, and the state does seem to have many credits and other adjustments, so be sure to review the specifics of your situation (on the federal side, too, of course.)

[happygirl]

Thank you so much! I haven't sorted through everything and we haven't even reached a formal agreement, but this helps me to at least estimate some things until I'm able to think more objectively.

[happygirl]

I think we've agreed that alimony will be 3500$ per month, so I need help with this one more time please. If this is my only income (I'm still too in shock to think about trying to get back in the job market right now), how much should I owe in taxes. I want to be sure to put the correct amount aside when I'm working out my new budget.

I truly do appreciate the help. I tried to figure it out, but I get confused about the deductions etc. I wouldn't itemize and some seem to be standard. I think this puts me into a different tax bracket too. Sadly, I trusted this to my husband in the past and never educated myself. Lesson learned the hard way...but life must move forward and with help, I'll learn.

Happy Thanksgiving and thank you in advance for the help!

[doingitallwrong]

At $3,500 per month your gross/AGI goes up to $42,000 per year. Federally, less the exemption of $4,000 and standard deduction of $6,300 and your taxable income is $31,700. Still the same tax bracket. Tax would be $4,294. For the state, your taxable income is $35,800 so a tax of $1,649. So your total tax would be $5,943.

Again, disclaimers, blah, blah, blah.

[happygirl]

You are so kind! Thank you for your help. It's not as bad as I thought. Now to work on the new budget....

[WillieGearhart]

Yeah, you should work on a new budget, as it is an important thing because you are going to be separated. You need to predict all your personal expenses as well as taxes.