What is the difference for income tax purposes between alimony and child support?
Alimony is deductible by the payer. It has to be included in the taxable income of the recipient. Child support, on the other hand, is not deductible by the payer, and it is not included in the taxable income of the recipient. Payers usually prefer to categorize payments as alimony, because they get a tax deduction. And, often, the tax benefit to the payer outweighs the tax cost to the recipient. In these cases, the parties can increase the alimony payment just enough to compensate the recipient’s tax cost, and have the payer still come out ahead. Q: So aren’t we better off just making all the payments alimony (instead of child support) and getting the tax benefit? A: Not always. First of all, sometimes the recipient and payer are in the same tax bracket. Then there’s no overall benefit. Second, there are legal requirements that must be met in order for alimony to be tax deductible. And meeting those requirements might not be best for the family. Q: What are the requirements for a paym
