March 12, 2013 12:47 pm

Family Support Payments Can Be Deductible Alimony

Alimony payments are deductible by the payer spouse and income to the recipient spouse. In contrast, child support is neither deductible nor treated as income. When a single payment is made to the spouse with custody of the children, how should it be characterized for tax purposes?

That was the dilemma in a case involving a couple in the midst of a marital dissolution in California. A court ordered the father to pay “family support,” and his payments for the year totaled more than $24,000.  He deducted the entire amount; the mother argued that part of the payments should be treated as child support and not taxable to her (or deductible by him).

A court sided with the father. In this case, the support orders were an unallocated award of spousal and child support. They did not “fix” any portion of the family support payments as an amount payable for the support of the children. Thus, the entire amount of his payments was deductible alimony.

Even in the absence of an explicit allocation, if the payments had been set to terminate upon the happening of an event related to the children (e.g., when they attained age 18, went to college, got married, went into the military), then it could have been inferred that a portion of the family support award was for child support. That did not happen here.

Source: Brendon James DeLong, TC Memo 2013-70

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Probate estate

Property held in a decedent’s name passing by will.

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