Taxpayers who are going through a divorce or a marital separation often have questions about the tax ramifications associated with the receipt of maintenance and/or child support payments. Before filing your taxes, it is important to fully understand the tax laws and tax consequences that are applicable to your situation. In spite of the difficulties that you are experiencing, the IRS will still expect you to file your taxes correctly and on time. Using a tax professional to prepare and record your taxes during a divorce can provide you with the peace of mind you need during these times of confusion and financial uncertainty.
1. Maintenance payments are considered taxable income
Maintenance, as defined by the IRS, is considered earned income and is taxable to you in the year received. The amount of the payment must be reported on IRS Form 1040. You cannot use Form 1040A or Form 1040EZ.
The amount of maintenance paid to a former spouse is deductible and may be claimed in the year paid on the IRS Form 1040.
A payment to or for a spouse or former spouse under a divorce or separation instrument is considered to be maintenance, if the spouses do not file a joint return with each other, and if the following conditions are met:
- The maintenance payment must be made by cash, check, money order, etc.
- The instrument does not designate the payments as "not maintenance."
- The spouses are not members of the same household at the time the maintenance payments are made.
Exception: If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree or court order may qualify as alimony even if you are of the same household at the time of payment.
There is no liability for maintenance payments after the death of the recipient spouse.
The maintenance payment is not treated as child support.
2. Child support payments are not considered taxable income
Child support payments are neither deductible by the payor nor taxable to the payee. When you total your gross income to see if you are required to file a tax return, do not include child support payments received.