Is Child Support Tax Deductible?

by Mary Stearns-Montgomery
on 22 September, 2017

Getting divorced entails a wide range of financial considerations, including potential income tax liability. Spouses who are able to amicably resolve their divorces can often structure terms that provide tax benefits on both sides as certain arrangements have tax implications while others do not. Is child support tax deductible? What about alimony? Can your property distribution trigger income tax liability? Here is a brief overview of some of the key tax-related issues involved in getting divorced in Georgia:

1. Is Child Support Taxable?

The Internal Revenue Service’s (IRS) answer to this question is clear: “No, child support payments are neither deductible by the payer nor taxable to the recipient. When you calculate your gross income to see if you’re required to file a tax return, don’t include child support payments received.” 

The reason for this is simple: Since child support payments are intended to meet your children’s needs, they are not considered income of the recipient-spouse. Parents cannot deduct their child’s costs of living while they are married, and child-related expenses do not become tax deductions as a result of the parents getting divorced.

2. Is Alimony (Spousal Support) Taxable?

Alimony (spousal support) is treated differently than child support for income tax purposes. With regard to alimony, the general rule is that payments are deductible by the payer and must be reported as taxable income by the recipient. However, in order for a payment to be considered “alimony” for federal income tax purposes, it must be structured appropriately. It is possible for certain payments between former spouses to not receive this tax treatment, and this is a result which may (or may not) be desirable.

3. Will Dividing Our Marital Assets Trigger Tax Liability?

Generally speaking, the process of dividing your marital assets during your divorce will not trigger income tax liability. The transfer of assets between spouses is not a taxable event, and the IRS allows for non-taxable transfers between former spouses for up to one year as “incident to divorce.”

However, there are certain property-related transactions that can result in taxes being owed to the IRS. For example, if divorcing spouses agree to sell a jointly-owned asset and split the proceeds, any gains from the sale must be apportioned between the spouses and included in their reportable income. If you receive an asset in your divorce settlement and decide to sell it after marriage is over, this can potentially trigger tax liability (for either ordinary income or capital gains) as well.

For many individuals, tax planning is a critical aspect of the divorce process. For more information, we encourage you to read:

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If you would like more information about child support, the taxable aspects of divorce, and how to structure your divorce to avoid claims of tax liability; we encourage you to schedule an initial consultation. To speak with a divorce attorney in confidence, please call (678) 971-3413 or inquire online today.

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