A common question in my office regarding parents experiencing divorce concerns learn how to treat child for tax purposes.
Fortunately, this is a simple one to answer. Child payments have no income tax effect: They are not deductible by the charges parent, and they are definitely not taxable to the obtaining parent.
In a rarity you have tax code, there are no exceptions. Most tax provisions take on exceptions and exceptions with exceptions, and exceptions with exceptions to the conditions. But here's one space where there is a pair rule: Child is not deductible and not taxable.
This is the polar opposite of alimony (also called spousal and even maintenance). As long enjoy it meets all the requirements initial tax code, alimony is deductible with one paying it, and taxable with one receiving it.
It can get dirty when both child and alimony attend your divorce. If you're not careful, you can get with payments you thought were insurance deductible alimony being treated much less non-deductible child. Sometimes even divorce lawyers miss this one.
Property divisions in a divorce generally have no income tax effect either. Again, but still, you have to be careful at any time both alimony payments in addition to a significant property division.
Be sure to look an experienced family law attorney it is all your agreement meets conditions in the tax green. You might also about to check with a tax advisor who understands divorce.
.
No comments:
Post a Comment