Are Alimony and Child Support Taxable?

As if divorce wasn’t emotional and difficult enough, new tax laws are further complicating matters. If you are filing for divorce in 2019 and you expect to receive or pay alimony or child support payments, you need to be aware of some recent changes to tax law.

Understanding the Tax Implications of Child Support and Spousal Support

The new tax law went into effect on January 1, 2019. This law has outlined major changes to alimony payments, in particular. Here are the basics of how these laws have changed.

Alimony Payments

In the past, alimony was considered a form of income, and if you received alimony, you needed to report it on your tax return. This income was taxable, and failure to report it was a crime.

Additionally, the person who paid alimony would get to deduct it from their return. Though they may not have liked paying out alimony payments, they at least had the consolation of knowing that the payments were tax deductible. Not so anymore.

Starting January 1, 2019, alimony payments no longer need to be reported as income by the receiving spouse. Additionally, the spousal support payments are no longer considered deductible by the new tax law.

This may seem like the receiving spouse has an unfair advantage under these new rules; however, the implications could go either way. With these new rules, the person who must pay spousal support may fight harder for lower payments, because they are no longer tax deductible. This could result in less support for the receiving spouse.

This new law could also result in nastier divorce proceedings and more difficulty coming to resolutions regarding alimony payments.

Child Support Payments

As for child support payments, they are not deductible. This income is not added to the receiving spouse’s income, nor is it taken out of the payee’s gross income. To clarify, the person who pays child support must still report their gross income to the Internal Revenue Service (IRS).

They can’t subtract the child support payments (deduct them), and so in that way, the income is still taxable. In some situations, you might be entitled to a child tax credit by claiming the child as a dependent.

In general, the custodial parent (the person receiving child support payments) would be the one who gets to take advantage of the child tax credit. If that parent agrees to let you claim the child for tax purposes, they would have to sign the following form: Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.

For additional questions related to the new tax law, you should contact a child support attorney.

See How a Family Divorce Attorney Can Help Resolve Alimony or Child Support Issues

There’s no question that the new tax law is going to have everyone in a tizzy, but you don’t have to navigate this new frontier on your own. Your family attorney can carefully guide you through this process so that you understand how your divorce will impact your taxes and so you can be sure that this new law doesn’t unfairly penalize you financially.

Contact The Law Office of Laurence J. Brock to get started on your case. Call 909-466-7661, or send in the contact form located down below.

The post Are Alimony and Child Support Taxable? appeared first on Law Office of Laurence J. Brock.