Attorney, Cordell & Cordell
Divorce can bring some big changes to the way you file your taxes and which exemptions and deductions you can claim.
With tax season just beginning to ramp up, here is some information to get you started on your federal taxes in terms of how alimony and child support affect your taxes.
Alimony paid can be deducted whether or not your deductions are itemized. Alimony is taxable to the payee and a tax deduction to the payor.
You must provide the social security number of the person you paid alimony to or received alimony from, or risk being fined or having your deduction be disallowed.
Be aware that if your alimony payments are significantly reduced during the first three years, you may be subject to the recapture rule. This rule does not allow you to take a full deduction of alimony paid if your payments decreased over the threshold amount.
Child support is not taxable. Neither the payor nor the payee can claim child support as income or can get a tax deduction for child support paid.
The governments’ reasoning behind this is simple: when married, you were unable to deduct the cost of buying your children clothing and food so it’s no different now that you are no longer living in the same house.
This information is general in nature and should not be construed as tax advice. You should work with your attorney or tax professional to determine the tax advantages that will work best for your situation.
Read all the articles in our Divorce and Taxes series:
- Attorney Fees
- Marital Status
- Child Dependency Exemptions
- Mortgage Interest and Real Estate Taxes
- Alimony and Child Support
Jill A. Duffy is an Associate Attorney in the Troy, Mich., office of Cordell & Cordell. She is licensed to practice in the state of Michigan. Ms. Duffy received her BA in Psychology and Spanish and graduated Magna Cum Laude from Oakland University. She received her Juris Doctor from Michigan State University College of Law and graduated Magna Cum Laude.