Getting a divorce is never easy. There may be specific Tax consequences you need to consider before reaching an Agreement. A recent question was asked of me involving Child Support versus Alimony:
"So my question is... is Undifferentiated Family Support fully deductible for me, or would the IRS infer from the above arrangement that $$$$ is maintenance
and $$$$ is child support, the latter not being deductible? And
would the IRS therefore seek to recover taxes and penalties from me?
Here's my response:
(In Washington) The Family Law Court will require a Child Support Order with any Parenting Plan. If they are filing these, any reasonable amount can be designated as Child Support. Any separate amount designated as Alimony would be deductible from income.
One important note to point out: You may deduct from income the amount of alimony or separate maintenance you paid, and you must include in income the amount of alimony or separate maintenance you received. So what one spouse deducts from income, the other must include in income.
Please see IRS Tax Topic 452 - Alimony Paid for complete details.
If they do not file a Parenting Plan or Child Support Agreement, it seems they bear the risk with of enforcing back child support if this caveat isn't clearly spelled out. I have seen this language: This is a binding settlement agreement pursuant to Court Rule 2A. This agreement resolves completely all existing child support disputes between the parties.
However, the rules around this I defer to a qualified Divorce Attorney. In summary, whatever is filed with the court becomes the supporting documentation should the IRS ever question what is reported on a tax return.
I recommend retaining a Collaborative Divorce Attorney, Karin Quirk. She is a seasoned professional practicing a Respectful and Cooperative Divorce. Her fee is set and very reasonable.
And no matter what, PUT YOUR KIDS FIRST!
"So my question is... is Undifferentiated Family Support fully deductible for me, or would the IRS infer from the above arrangement that $$$$ is maintenance
and $$$$ is child support, the latter not being deductible? And
would the IRS therefore seek to recover taxes and penalties from me?
Here's my response:
(In Washington) The Family Law Court will require a Child Support Order with any Parenting Plan. If they are filing these, any reasonable amount can be designated as Child Support. Any separate amount designated as Alimony would be deductible from income.
One important note to point out: You may deduct from income the amount of alimony or separate maintenance you paid, and you must include in income the amount of alimony or separate maintenance you received. So what one spouse deducts from income, the other must include in income.
Please see IRS Tax Topic 452 - Alimony Paid for complete details.
If they do not file a Parenting Plan or Child Support Agreement, it seems they bear the risk with of enforcing back child support if this caveat isn't clearly spelled out. I have seen this language: This is a binding settlement agreement pursuant to Court Rule 2A. This agreement resolves completely all existing child support disputes between the parties.
However, the rules around this I defer to a qualified Divorce Attorney. In summary, whatever is filed with the court becomes the supporting documentation should the IRS ever question what is reported on a tax return.
I recommend retaining a Collaborative Divorce Attorney, Karin Quirk. She is a seasoned professional practicing a Respectful and Cooperative Divorce. Her fee is set and very reasonable.
And no matter what, PUT YOUR KIDS FIRST!
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