More women now paying child support & alimony, but tax implications remain the same

This post was updated March 30, 2018.

When the end of matrimony leads to the start of alimony, each parting partner can feel the tax effects.

If you are the ex-spouse getting alimony payments, the money is taxable to you as income in the year it is received. This added income calls for a couple of additional tax considerations for the recipient.

In traditional man and woman marriages, this usually meant that the husband made spousal support payments to his ex-wife.

But the changing world -- including, but not limited to, things like more women working and the nationwide legalization of gay and lesbian marriages -- has led to divorce changes, too.

Changing divorce demographics: Around half of marriages now end in divorce, although some statisticians say that number is not really accurate and others complain that the 50 percent figure distorts the many marriage dissolution variables.

But there's no disputing that many marriages end in divorce.

And a lot of those legal break-ups produce alimony and child support payments.

Typically, it's been the ex-husband who makes financial support payments to his ex-wife and kids. That trend, however, is changing even in the dissolution of so-called traditional marriages.

More than half -- 56 percent -- of the nation's top divorce attorneys say that they have seen an increase in the number of women paying child support during the past three years, according to a 2012 survey of American Academy of Matrimonial Lawyers (AAML).

Similarly, 47 percent of the attorneys report a rise in women being responsible for alimony throughout the same time period.

"The court system always ends up reflecting changes in our society and this is certainly the case with issues regarding who pays child support and alimony," said Ken Altshuler, AAML president, in a statement regarding the survey results. 

"As more women achieve success on their career paths, they are also finding themselves increasingly responsible for financial obligations during and after the divorce process," Altshuler said.

All alimony payers are unhappy: Regardless of the gender of the spouse making support payments, there are some tax laws that apply across the board.

The spouse making alimony payments is not happy.

Just as many men grumble about paying alimony to their former wives, women are not pleased with the turnaround.

"We see women who are every bit as angry as their male counterparts, maybe more so, when they are confronted with the concept of paying spousal support to a man," Alton Abramowitz, president-elect of AAML, told Reuters.

Don't forget the taxes: The alimony paying ex, however, can get some solace from the tax code. At least on 2017 and 2018 filings.

Alimony typically is considered taxable income to the person receiving it. That's right, ladies and gentlemen, your spousal support money is likely to increase your ex's tax bill.

If you're getting those checks from an ex, be sure to report it to the Internal Revenue Service on line 11 of your Form 1040.

And alimony check writers, the tax news for you gets better. The payer of alimony can deduct that amount on his or her tax return.

Alimony payments are an adjustment to income, also known as an above-the-line deduction, and the amount is entered on line 31a of the payer's Form 1040.

Note that the IRS also wants the receiving spouse's Social Security number so it can make sure she or he reports the payments as income.

Child support, however, is not taxable, either to the spouse receiving it or the children for whom it is supposed to be spent.

That tax-exclusion also means that child support payments can't be deducted by the paying parent.

Since the different tax treatment of these common divorce-related payments could affect your tax life, be sure to take them into account when structuring your divorce settlement.

Tax reform changes alimony taxes: The alimony rules, however, must be reconsidered by folks contemplating divorce in 2018 and beyond in light of new tax law.

Current tax provisions regarding alimony taxability and deductibility are in effect through 2018. But things change under the Tax Cuts and Jobs Act (TCJA), the partial tax reform bill that took effect on Jan. 1, 2018, and whose provisions will remain in the Internal Revenue Code through 2025.

The above-the-line tax deduction will not be allowed for alimony payments included in divorce or separation instruments that are executed after Dec. 31, 2018. And recipients of those 2019 or later court-ordered alimony payments will no longer have to include them in taxable income

What about prior marital dissolution deals? The pre-TCJA tax law will continue for alimony payments made under pre-2019 divorce agreements.

This could complicate divorce proceedings under way this year.

The future ex who will paying will want to wrap up the divorce by Dec. 31, 2018, in order to maintain his or her alimony deduction.

However, the other future former spouse who will be getting the payments will want to delay the final decree issuance until 2019 so that he or she won't owe tax on the money.

And you thought things couldn't get any messier! Thanks/no thanks Congress!

You also might find these items of interest:

• 6 divorce tax tips in the wake of the Brangelina split
• Single dads also get stiffed when it comes to child support payments
• Dealing with Divorce Dollars + Cents, Austin Woman article

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Comments

[Heide Penrod]

Better not to divorce. Divorce nowadays is too expensive. Make love dominates your family always and not the pride and infidelity. A family that prays together,stays together. So just pray and have faith.

[Reulet Krauss]

Nice idea! I like that tax payment depends on the status of the family they are living in. The ex-wife who has received a an alimony from her ex-husband should have to pay taxes but that of the child's support from his father is non-taxable. Based from the data here given, it seems that the Holy Matrimony is not anymore given with great respect.

[Alm Kwon]

Everything you do needs money.

[divorce mediation]

Having a divorce lawyer represent you is additionally a sensible support system in managing the strain of a tough time.

[Kay]

Good point, Jeffrey. Thanks. All the more reason to have a good divorce attorney and a good tax lawyer!

[Jeffrey A Day]

You failed to mention in the article, if a person by the court order is responsible for alimony payments as well as child support payments, all payments made in a given year are applied first to the child support.

Therefore, no deduction for allimony is allowed unless and until the child support payments are current.