Tax Deductions for Alimony and Child Support

What’s the difference between tax deductions for alimony and child support? One would think there isn’t one, given that both alimony and child support go to the same party. Tax deductions, however, are a different story. If confused, always consult an attorney on the matter, because if you’re in the situation where you’re paying alimony or child support or both, you’re going to want to know just what you can and can’t deduct.

Understanding Alimony and How Tax Deductions Work

Alimony payments are actually taxable. In fact, you must include them in your income. You do, however, have to qualify for the tax deduction, and here are the standards to follow:

• For you to qualify, your alimony payments must be in cash.
• Your spouse, or someone representing your spouse, must receive the payment under a divorce or separation instrument.
• The agreement can’t exclude any payments from being included in the recipient’s income or deducted by the payor.
• Both spouses can’t be members of the same household.
• Payments must not be liable upon death of either spouse.

Additionally, if the amount you pay depends on a particular life event of any child, which the custodial parent receives, you then can’t claim that payment as alimony even if it was paid as alimony. It therefore can’t be tax-deducted as alimony.

This accounts for the fact that a recapture rule is always in place in the third year for alimony deductions, keeping large payments from being treated as such. Instead, larger alimony payments often are treated as nondeductible property settlements.

The recapture rule applies in that third year if your payments in the second and third years go down drastically from what you’ve paid in that first year, as well as if the third year payments decrease by more than $15,000 from the second year.

Child Support Payments, However, Are Never Deductible

No non-custodial parent can claim them in taxes. This largely is attributed to the fact that child support payments are for the child and not for other expenses of a household belonging to the other parent. Generally speaking, when it’s imperative that when they are for a person who can’t pay for themselves—in this case, a child—they can’t be deducted as income.

Compared to alimony, the fact is you’re paying for someone to function based on the situation that contributed to the quality of care to a child, but not directly to the child. For those purposes, alimony can be deducted successfully, provided all parameters are satisfied.

If You Have Any Other Questions About Tax Law, Divorce Law, or Family Law: Consult an Attorney

From state to state, standards may differ. Always consult a qualified attorney specializing in the specific niche you’re inquiring about. Make it a point to ask all the pointed questions and know based on your situation what’s required of you. If you do pay alimony as ordered by the court, you can deduct those payments from your taxes. Just make sure you satisfy those specific requirements first.