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Small Business Tax: Q&A: May 2016

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No tax compromise over alimony

Q. Are alimony deductions reduced at higher income levels? M.K., Westport, Conn.

A. No. Unlike other itemized deductions subject to a floor based on adjusted gross income (AGI), such as medical and miscellaneous expenses, there’s no reduction for alimony deductions. Similarly, the write-off for alimony isn’t reduced for high-income taxpayers under the “Pease rule.” The full amount is deducted “above-the-line” for AGI purposes on Line 31a of Form 1040, thus providing other potential tax benefits. To qualify, the amount must be paid under a divorce or separate maintenance decree or written separation agreement entered into between you and your spouse or former spouse.

Tip: Conversely, child support payments are not deductible at all.

Tax aid for using medical aide

Q. My husband needs assistance with daily living activities. Can we deduct the cost of a helper? O.W., Kissimmee, Fla.

A. It depends. ...(register to read more)

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