With divorce comes many changes to your finances. Your taxes will be no exception. There are numerous tax regulations you should be aware of when getting a divorce. Your finances after divorce will reflect any support orders or property settlements in effect.
Child support is not considered income for tax purposes and thus is not taxed to the payee nor is it deductible to the payor. On the other hand, spousal support, also called spousal maintenance or alimony, is taxable to the payee and deductible to the payor, if certain requirements are met. You must be filing separately, no longer cohabitating with the spouse you are paying support for, the payments must be made in cash, as opposed to real or personal property, and there must be no carried liability to pay after your spouse’s death.
You may also be able to deduct payments made to a third party on behalf of your spouse, such as paying for housing or medical bills. The spouse seeking a spousal support award may also be eligible to deduct the fees associated with obtaining a spousal support order, to include attorney’s fees and other professional services. In determining the amount of spousal support, one of the considerations the judge will make is the tax implication of any support ordered. Since the spousal support order must specifically designate the support as wholly spousal support, variances in the order could change the tax implications. Consult with an experienced Los Angeles family law attorney for help in drafting up an advantageous support order.
In general, if you receive support, it will be taxed as income and if you pay it, it can be deducted even if you do not itemize. If you plan to deduct your support paid, be sure to keep excellent records of all payments. Keep in mind that domestic partner support may be handled differently as federal and state tax laws do not take into consideration the status domestic partnerships have in California. If you have questions about domestic partner support or spousal support awards, contact an experienced family law attorney for guidance.
Are you in the Los Angeles or Beverley Hills area and have questions about spousal support? Certified Family Law Specialist Mark H. Karney has extensive experience handling complex divorce cases and can ensure you end up with a support order that looks out for your best interests now and in the future. Serving Los Angeles County, attorney Mark H. Karney can provide expert counsel for all your family law needs. Call our office at 310-622-9434; email us at intake@cfli.com or contact us through our online form today to schedule a free consultation.