Attorney
The Beatles are best known for their songs about love, love lost, and their embrace of counterculture, but as April 15 approaches, a lesser-known track often gets a few extra plays. “Taxman” is a tongue-in-cheek take on the band members’ precarious financial positions, which ushered in the Fab Four’s new sound and signaled their willingness to explore political topics.
If you don’t get it stuck in your head at least one time between now and tax day, you deserve a medal. Especially if this is your first year filing taxes after splitting up with your partner, and you are a bit concerned about the impact alimony or child support payments will have on your 1040.
Thanks to his reputation as a financially savvy attorney, Bob Matteucci fields a lot of questions about this topic from folks in the Albuquerque area. So below is a rundown of the basic details anyone paying or receiving spousal support or child support needs to know as they get ready to file their taxes.
Are Alimony Payments Taxable?
Spousal support, which is commonly referred to as alimony, is often used as a bargaining chip in divorces where one spouse is walking away with ownership of a couple’s business interests or real estate, and the other spouse needs additional compensation to make things fair. So there’s a lot of debate over whether and how it should be taxed. And the law on this has changed over time.
As of Spring 2025, alimony payments cannot be deducted by the payer, and they do not need to be reported as income by the recipient.
However, this is only true if the payment can truly be classified as alimony. The IRS will only consider a payment to be alimony if:
- You don’t file a joint tax return with your former spouse.
- You make alimony payments in cash, by check, or by money order.
- You make payments to or for a spouse or former spouse under an applicable divorce or legal separation agreement.
- Legally separated spouses cannot be part of the same household when making payments.
- Liability for the payment doesn’t extend beyond the death of the spouse who receives payments.
- The payment is not child support or a property settlement.
Note the part about the payment being part of a divorce or legal separation agreement. This is another reason why working with an experienced family law attorney when you hammer out your divorce is key.
The Tax Implications of Child Support
Child support payments are treated similarly.
- Child support payments are not tax-deductible. This means that paying parents cannot reduce their taxable income by the amount of child support they pay.
- On the flip side, receiving parents do not have to include child support payments in their taxable income. Child support is intended to cover the child’s basic needs, and the IRS does not treat these funds as taxable income.
This is fairly straightforward, but many couples still get into disputes at tax time. The biggest issue is figuring out which parent will claim the child as a dependent for tax purposes. Claiming a dependent can provide significant tax benefits — like making the filer eligible for the Child Tax Credit and the Earned Income Tax Credit.
Most families in the Albuquerque area agree that the parent with primary custody of the child should claim them as a dependent each year. This can even be written into the parenting plan or marital settlement agreement. However, it may be wise for the parents to work with an accountant who can determine if it is better for tax purposes for the non-custodial parent to make the claim.
Serving Families with Dignity & Compassion
The Taxman is coming, so it’s time for newly divorced parents to pull out their separation agreements and parenting plans as well as that shoebox full of receipts. Please contact Bob today if you need assistance.