April 12, 2011

Differences In Tax Treatment Of Spousal Support and Child Support

In talking to Oregonians as part of our divorce law practice, we come across a lot of misinformation in the public about tax treatment of child support and spousal support.  Many people think they are treated the same, or that child support is taxable income. Child support is not considered taxable income, and child support and spousal support are treated differently for tax purposes.

Child support is not income to the recipient, and the parent paying child support receives no tax deduction.

Spousal support (or alimony, per IRS lingo) can be deducted by the paying parent, and is included in the taxable income of the recipient.

Sophisticated calculations can be done to maximize the tax benefits to one or both parties. Engaging a CPA or a Certified Divorce Financial Analyst to work with your attorney can help assure that all of the tax consequences of support package are considered.