The only thing worse than your ex taking all your money is the government taking it, too. Divorce has several tax implications that will affect how you file. Knowing these changes ahead of time can prevent mistakes and last-minute stress.
One of the questions you may have is the effects of child support and alimony (or spousal support) on taxes. Regulations from the IRS on these matters are as follows.
The government does not involve child support in taxes whether you are the one who makes or receives payments. This means that it is neither a deductible nor taxable income because your children deserve access to all of the money. Being aware of this fact can help you in your budgeting and prevent you from making errors on your tax return.
Spousal support, on the other hand, is not a guarantee in a Texas divorce, as it relies on many circumstances that determine the need and length of payments. This difference from child support makes it subject to taxation. If you pay alimony, you can claim it as a deductible. However, you will need your ex’s Social Security number or tax ID, and you can only include payments under the divorce decree. Any additional payments you make on your own do not count.
If you receive alimony, the government can tax it as income for that year. The IRS has specific guidelines on what constitutes alimony, so review them first to be sure you do not include more or less than you need to. Furthermore, this income does not qualify for tax withholding, so you can avoid penalties by either withholding more taxes from your wages or paying estimated taxes.
Other tips on divorce and taxes
Child and spousal support payments are not the only ways divorce influences your tax requirements. The date when your divorce is final and the results of property division also carry tax implications, so you may want to discuss these with an experienced accountant.