Child Support:
Tax Treatment: Child support payments are neither deductible by the payer nor taxable to the recipient. When calculating gross income for tax purposes, recipients should exclude child support received, and payers cannot deduct these amounts. irs.gov
Alimony (Spousal Support):
Agreements Executed Before January 1, 2019:
Payer: Alimony payments are deductible from the payer's income.
Recipient: Alimony received is taxable and must be included in gross income. irs.gov
Agreements Executed After December 31, 2018:
Payer: Alimony payments are not deductible.
Recipient: Alimony received is not included in gross income. irs.gov
Important Considerations:
Modification of Agreements: If a pre-2019 agreement is modified after December 31, 2018, the new tax rules apply only if the modification expressly states that the alimony is neither deductible by the payer nor includable in the recipient's income.
Reporting Requirements: For agreements where alimony is taxable to the recipient, the payer must obtain the recipient's Social Security Number (SSN) and report it on their tax return. Failure to do so may result in a $50 penalty.
By understanding these distinctions, parents can ensure accurate tax reporting and compliance with IRS regulations regarding child support and alimony payments.