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Alimony is taxable income for the recipient in the US, but child support is not. The person paying alimony can deduct payments from their taxable income. It’s important to keep alimony and child support payments separate to avoid tax problems.
Depending on the tax laws where you live, you may have to pay tax on the alimony you receive. In the United States, alimony is taxable to the recipient, although the spouse paying the alimony can, in most cases, deduct alimony payments from his or her taxable income. While the United States taxes alimony, there is no tax on child support received from a former spouse or partner. Divorce law in other countries may treat alimony taxes differently, so it’s a good idea to talk to a tax attorney about your obligations in this area.
Alimony, also known as spousal support, is financial support paid by one party to another after a divorce or legal separation. Unlike child support, which is treated very differently in United States family law, alimony is considered a form of income for the spouse who receives it. Therefore, the spouse must pay income taxes on the money he receives. The person paying the alimony is not responsible for deducting or paying these taxes, so it is the recipient’s responsibility to pay the taxes on the alimony received. To avoid having to pay a large tax bill at the end of the year, many people in the United States who receive alimony choose to pay quarterly estimated taxes to the Internal Revenue Service (IRS).
United States tax law does not require custodial parents who receive child support to report child support as income. A parent who pays child support to another parent cannot deduct support from her taxable income. As such, it is crucial that alimony and child support payments are kept separate on both parents’ books to avoid tax problems.
The person paying the alimony may deduct their alimony payments from their own income for tax purposes. As of 2011, the IRS requirements for deducting alimony payments from your taxable income include the requirement that you and your ex-spouse not file a joint tax return and that you live in separate households. Alimony payments must be made in cash, check, or money order, so you cannot deduct the value of an investment or other asset paid in lieu of spousal support. Additionally, alimony must be identified in your divorce decree or legal separation agreement as alimony or spousal support. If the money payment is identified as a financial settlement, you will not be able to deduct your alimony payments from your taxes.
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