Alimony, Child Support, and Taxes

Alimony, also known as spousal support, is usually deductible for the payor and taxable for the recipient, even for people who do not itemize deductions. Child support is neutral from a tax perspective -- no tax deduction and no additional taxable income for anyone.  

If you are writing a separation or divorce agreement, alimony can be a good way to transfer money from a higher tax bracket to a lower tax bracket so that more money stays somewhere in the restructured family. A professional family mediator or an attorney can help you figure out what would be best for you, your spouse, and your children.

The IRS does have some important rules about what counts as alimony. If you are filing a joint tax return for a year in which you were married but separated, alimony is almost certainly irrelevant. For payments to count as alimony for federal taxes, you must be making the payments because of an official decree of divorce that requires support payments, a written separation agreement requiring such payments, or any type of court order that requires you to support your spouse or your ex.  You cannot be living under the same roof as your spouse or ex-spouse when you make the payments (unless your have a court order to the contrary). 

To the IRS, voluntary payments may not count as alimony unless they are written into a separation agreement that is later incorporated into a court order.  If you are just being nice or just caving in to pressure from your ex, the payments will probably not count as alimony.

Another rule: If you are obligated to pay any money or give any property to your spouse or former spouse even if he or she dies, then the payment is not alimony. It could be part of your agreement about how to divide marital property when you divorce, but it is not alimony. The same is true if your estate would be obligated to pay anything to your ex when you die. For the IRS to count payments as alimony, they must end automatically at the death of either party.

In short, it is a good idea to get help from a mediator and/or an attorney, put your alimony agreement into writing, and ask a court to incorporate your agreement into an order.

The author is a Professional Family Mediator certified by the Virginia Supreme Court. She is not an attorney. This article is for informational purposes only. Nothing here should be construed as legal advice. More information is available at fairfaxmediator.com.