If you live in California and either receive alimony or pay alimony, you should be keeping records of payments for tax purposes. Unfortunately, many divorced individuals are unaware of their alimony recordkeeping obligations and are often the subject of IRS scrutiny. You can avoid scrutiny by educating yourself on what documentation is and is not worth keeping.
According to FindLaw, alimony recipients should keep a detailed list of all alimony payments received in the last three years and details regarding each. Three years is standard tax-record-keeping protocol. For each payment, you should make note of the date, the amount received, the check number, the account number connected to the check, the name on the bank account, a copy of the payment and a copy of the receipt you endorsed in exchange for payment. Alimony is taxable in California, so this information can help you when filing your annual returns. Your detailed record keeping can also help you in the event that your former spouse stops making monthly payments.
If you are an alimony payer in California, your payments are tax deductible. For most payers, this is enough incentive to keep adequate records. Some details of which you should keep track include the check number of each payment, the address to which you sent the check, copies of cashed checks and receipts with the other party’s signature. You too should keep documentation for the three years prior to the date you file a tax return.
You should not construe this information as legal advice. It is provided for purely educational purposes.