When filing your federal income tax return, you can often deduct expenses related to your spouse and children. However, payments you make toward alimony and child support are not always deductible. Alimony is sometimes claimed as a deduction for the payer and as income for the recipient. In some cases, the issue of tax claims on alimony is established in the divorce decree. A divorcing couple can determine how each party claims the alimony instead of letting the court decide. Many couples choose alimony in lieu (loo) of property in the divorce settlement. Since the money is to be awarded instead of property, the paying party is still liable for the full amount of alimony, even if the receiving party dies. In this case, the balance of the alimony granted is treated as a property settlement, which is considered neither a deduction nor income for tax purposes. Similarly, child support cannot be claimed as either a deduction or income on the recipient's federal income tax return. Divorcing couples often outline the tax liability of child support in the divorce papers, which can be structured in one of several ways. One method which ex-couples can use when filing child support on their income taxes is for the paying party to claim payments as a deduction, while the receiving party claims the money as income. Another option is for the payer not to claim child support as deductible, and the recipient doesn't claim the money as income. If you're not sure about what you can legally claim as a deduction on your federal income taxes, find out. It could save you time, trouble, and money later on. For more specific information about the tax laws regarding alimony and child support, contact a tax professional.
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