Ted earned $150,000 during the current year. He paid Alice, his former wife, $75,000 in alimony. Under these facts, the tax is paid by the person who benefits from the income rather than the person who earned the income.

Question

Quizplus · Accepted Answer

This statement is true. In the case of alimony payments, the person receiving the alimony (Alice in this case) must pay taxes on the income received, while the person making the alimony payments (Ted in this case) can deduct the payments from their taxable income.

Ted Earned $150,000 During the Current Year