Alimony, Child Support, and Taxes

When you go through the documents for divorce, you may face the necessity to deal with alimony and child support issues. These two terms are often mixed and misunderstood by divorcees, which leads to ambiguity, misunderstandings and extra arguments. More to this alimony and child support don’t go from or come to your income alone. Apart from general alimony and child support payment rules, you should also consider the taxation process. 

Overall the process is far from straightforward. If you use divorce document preparation services or cooperate with professionals, get appropriate consultations before you agree to some alimony and child support terms. Or at least, do research on your own and get educated enough to know what to expect. 

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Alimony and Taxes

Alimony, also known as spousal support or maintenance, is a set amount of money a person has to pay to his spouse after a legal divorce or separation. The alimony is usually ordered by the court for a certain time and amount of money. Alimony process is handled with the appropriate taxation rules. To receive the proper alimony taxation, one should care that the alimony fit in the following conditions:

  • be paid in cash – it doesn’t mean you cannot use bank transfers or cheques for alimony payments. But they should be performed with money, not with some services or properties. So, you cannot make some repairs in your spouse’s house or give him\her your old car instead of paying the alimony. 
  • received by a spouse or person or organization entitled by a spouse – this is obvious that you should pay alimony straightly to your spouse or you can also make some payments for him\her by previous agreement, for example, pay the rent or mortgage to the landlord, pay for tuition to the university account and so on.
  • spouses cannot be members of the same household – if you are legally divorced or separated but still live in the same house, you cannot count alimonies for taxes. But there are some tricky details on such a situation, so if you happen to be in the one, consult your attorney, financial advisor or online platform onlinedivorcer.com to clear out the situation and avoid tax penalties. 
  • end with the recipient’s death – it is evident that when a recipient dies, you stop paying alimony to him/her. But you may also have some serious hurdles if you don’t add the death condition to the divorce agreement. For instance, if you agreed to pay the alimony for ten years, but your ex dies in five years, and you haven’t added the death condition to the agreement, you will have to pay the alimony to your spouse’s estate without the ability of tax deduction.

The common taxation rules for alimony are the following:

  • the payer should deduct the alimony from his\her gross income when filing taxes;
  • the recipient should count the alimony as a part of his\her gross income when filing taxes. 
  • one should mind that rules are slightly different alimony under divorce agreements signed before and after December 31, 2018. See Publication 504: Divorced or Separated Individuals or consult specialists. 

Child Support and Taxes

Child support, also known as child maintenance, a set amount of money a person has to pay to his spouse for the care and support of the children after a legal divorce or separation. The child support is usually ordered by the court for a certain time and amount of money. The child support process is handled with the appropriate taxation and penalty rules:

  • the payer cannot deduct child support from his\her gross income when filing taxes;
  • the recipient doesn’t have to count the child support as a part of his\her gross income when filing taxes. 
  • the dependency exemption can be used to take the tax deduction by either of the parents. If the parents cannot reach the agreement on the dependency exemption, the court will make the order on dependency exemption proportionally to the child support share each parent gives. 
  • late or missed payments of the child support may be garnished from the tax refunds of the payer. To prevent this one should request the child support order modification as soon as he/she faces hurdles with payments. 

Anyway, to avoid any misunderstandings and ambiguity with alimony and child support payments and taxation you are highly recommended to cooperate with professionals. If you file a divorce with a family law attorney, ask him/her for help, if you use divorce apply online, contact support team, in other cases, you can ask a financial advisor for assistance or seek support in other sources. Put in decent efforts, count with the law and stay responsible and reasonable in any situation.

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