Is child support tax-deductible? In the same vein, is alimony tax-deductible?
While the dissolution of a marriage is undoubtedly personally difficult and emotionally draining, there's no doubt that it can also create a strain on a person's finances.
And, it can raise some serious questions as to what should go on your tax return and what shouldn't.
For federal-tax purposes, if you pay child support, it is not deductible on your federal tax return. And, if you receive child support, you do not report the child support as income on your tax return as well.
Whether or not you can claim our child as a dependent on your tax return is based on a variety of factors including the child's support. In many cases, the custodial parent, the parent who the child lives with, will be the one who can claim the exemption. But, in some cases, the non-custodial parent can claim the child as their dependent, if the requirements are met, which include the relationship between the parent and the child, the residence of the child, the age of the child and whether or not the child supported him or herself.
What about alimony? In most cases, alimony is tax deductible for the ex-spouse who is paying the alimony, and is considered taxable income for the ex-spouse who is receiving the alimony payments. Of course, in the case where the divorce is not amicable, there is the possibility that your ex-spouse may challenge you as to whether or not you actually paid the alimony - so keeping receipts is necessary, especially in the case of a tax audit.
When a marriage falters, or when a divorce is necessary, taxes may be the last thing on a person's mind. But unfortunately, for most Americans, filing tax returns are a yearly necessity - so keeping the laws in mind becomes a requirement. And, if you ever run into trouble with the IRS or with your ex-spouse over a tax dispute, consulting a tax attorney may be helpful.
- Alimony Guidelines: What Records to Keep Regarding Your Alimony (FindLaw)
- Child Support and Taxes Q&A (FindLaw)
- Divorce and Taxes (FindLaw)