Tax Issues in Child Support and Divorce Cases

Last Updated On: 4/23/2015 2:53:18 PM

Do I have to count the Child Support payments that I receive each year as income on my tax forms?

No, you don’t have to report Child Support payments received on your tax return.  Child Support payments are not taxable income to the parent receiving them.       

Do I have to count the Alimony that I receive from my ex-spouse each year as income on my tax forms?

Yes.  Alimony (or "Spousal Support" or "Maintenance") payments are taxable income to the receiving spouse.

Can I deduct the Child Support that I pay from my income?

No.  Payments made for the support of children are not deductible by the paying parent.

Can I deduct the Alimony payments that I make each year to my spouse?

Yes, if you meet a few requirements.  In order to be a deduction:

  • Alimony must be paid by cash, check, or money order.  (Gifts or services do not qualify as deductible.)
  • The payments must be made under a divorce decree, a written separation agreement, or a written agreement that was part of the divorce.  AND
  • The parties must not be members of the same household.

If my wife has custody of our kids, but I pay a lot of money in child support, can I claim my son as a dependent on my taxes?

It depends.  There are a number of possibilities under West Virginia law.  

  1. Agreement.  You and the other parent may reach any agreement you wish on who claims the child for taxes.  For example, you could agree to take turns every year in claiming the child for taxes.  The Court normally will accept the agreement as part of the custody and support order.  If you do not reach an agreement, then one of the following options applies.
  2.  “Basic Shared Parenting.”  This is an arrangement where one parent has no more than 127 days per year (35%) with the child, and the other parent has at least 237 days per year (65%) with the child.  In this situation, the rule is that the tax deduction goes to the parent who receives child support.
  3.  “Extended Shared Parenting.”  This is an arrangement where both parents have more than 127 days per year with the child.  In this situation the rule is that the tax deduction normally is divided between the parents in proportion to their “adjusted” incomes.  This means their income as it was counted for the child support formula after some child-related expenses and costs are taken into consideration.
  4. “No Tax Benefit.”  If giving the tax deduction to one parent under these rules would not result in any actual benefit to that parent, then the Court is not required to follow the rules.
  5. To Paying Parent Only if Benefit Results to Receiving Parent.  For the parent paying child support to receive the dependent child tax deduction, there is one additional condition that must be satisfied.  The total "income and child support" the receiving parent gets must be higher when the tax deduction IS given to the paying parent than when the deduction IS NOT given to the paying parent.    Confusing?  Plenty.  This rule is hard even for lawyers and judges to figure out.

My wife and I agreed that I would make her alimony payments to her sister, because my wife needs some help handling finances.  Can I deduct these alimony payments I make, even if I don’t make them directly to my wife?

Yes.  Payments can be made to third parties on behalf of the payee spouse, but there are several requirements:

  • There must be written consent, from both paying spouse and receiving spouse, to use third party payment;
  • The written consent must state that the parties intend to treat the payment as subject to the alimony rules;
  • The written consent must be received by the paying spouse before the filing date of his/her tax return for the tax year in which the payment was made;
  • The payments must be made under a divorce decree, a written separation agreement, or a written agreement that was part of the divorce; AND
  • The parties must not be members of the same household.

My spouse and I were divorced in January of this year.  Can I file as a single person for last year?  

Maybe.  Filing status normally is determined by your marital status on the last day of the tax year.  Since you were married  on the last day of December (the last day of the "tax year"), you would normally have to file as a married person. 

But you can be entitled to file as a single taxpayer for last year's taxes if the following requirements are met:

  • You must file a separate return;
  • You must furnish more than one-half of the cost of maintaining the household that, for more than half of the tax year, was the principal home of the child (including an adopted child) or stepchild;
  • You are entitled to a dependency exemption for the child (or would be entitled except for waiver of the exemption to your spouse); AND
  • The other spouse was not a member of your household at any time during the last six months of the year.
This is general legal information. For guidance about your situation, talk to a lawyer.