Divorce changes many things in your life.  The decisions that are made in the process of divorce are likely to affect your finances, and can also affect your tax liabilities.  If you are paying spousal support, or if you are receiving it, there’s a few things you should know. Let’s review what the tax implications are to your divorce settlement.

Can I Claim Child Support Payments on my Taxes?

Child support payments are not taxable.  You will not be able to take a deduction for them on your taxes, and your ex-spouse will not have to claim them as income.  You may be ordered to pay child support and spousal support. Child support differs from spousal support, also called alimony.  You can only claim the spousal support part of your payment.

Am I Able to Claim Alimony on My Taxes?

Spousal support can be claimed on your taxes, but that is only if you meet certain requirements.

  • You have to be filing your tax return in your own name, not as part of a joint return
  • You must no longer be cohabitating with your ex-spouse that is receiving the support
  • You must be paying in cash, instead of through property transfers

You might also be able to deduct expenses paid to someone else on behalf of your ex-spouse.  For instance, if you contribute to their housing expenses, or medical expenses, these may be deductible.

I Receive Spousal Support… Do I Have to Report That as Income?

Unlike child support, alimony received must be reported as income.  The income is reported on your tax return.  You may, however, take a deduction for the attorney fees and other fees connected with getting the spousal support started.  These deductions can obviously be taken only in the year that they are paid.

Record Keeping

If you pay alimony, or any eligible third-party payments, and you intend to claim these expenses on your taxes, record keeping is important.  You must have an organized record of the money you have paid to your ex-spouse.

Domestic Partnerships

If you were in a domestic partnership that was dissolved, that is a different circumstance.  You may be receiving support payments ordered through the court, but this is particular to California.  The tax code, both state and federal, may not have requirements or allowances to accommodate these relationships.  If this is the case, contact a family law attorney to help you understand your tax liabilities.

Do I Need to File Special Tax Forms?

You can claim spousal support payments even if you don’t itemize deductions.  You must, however, use IRS for 1040 to file your taxes.  You cannot use 1040EZ, or 1040A to file.  You must also provide your ex-spouse’s Social Security number when filing.

Ask for Help If You Need It!

If you’re unclear on what you need to do in order to take the deduction, or to claim the income, contact your tax accountant or spousal support attorney for clarification.  This is your best bet to avoid tax complications later.