child support

Tax Consequences Of Child Support Payments For Payors And Recipients

Individuals must consider the tax consequences of obligations related to child support in divorce proceedings. The fact that child support payments are not deductible and the receipt of child support is not taxable sometimes creates spousal bitterness and discord in a divorce case. In this situation, the prevalent issue is the conflict between the payor’s desire to characterize his or her payment as an income tax deductible payment of alimony, while the payee-spouse wishes to treat the payment as a tax-free receipt of child support.

Tax Effects of Divorce or Separation

Individuals in the middle of, or just beyond a divorce rarely consider the tax ramifications of the agreements that they make as a party to the divorce proceedings. It’s only later that they become aware of the tax consequences of their divorce, when they get their tax bill and their accountant informs them of the special circumstances which increased it.

Tax Effects of Divorce or SeparationHere are some tax effects to remember if you are involved in a divorce or separation: