I pay maintenance, is it deductible?
Whether or not you can claim maintenance as a tax deduction depends on when your divorce was finalized. If your divorce was finalized after January 1, 2019 maintenance is no longer deductible. However, if your divorce was finalized prior to January 1, 2019 you may deduct maintenance payments. If your divorce was entered prior to January 1, 2019 and was thereafter modified after January 1, 2019, you may still be able to deduct your maintenance payments. Maintenance ordered prior to January 1, 2019 but modified thereafter is still deductible so long as the modification does not change the terms or separate maintenance payments and it does specifically state the payments are not deductible to the payer spouse.
I’m a non-custodial parent, can I claim my child on taxes?
As a general rule only one person can claim a child for purposes of filing under the head of household tax credit. Furthermore, generally only one party can claim a child in order to claim the child tax credit/credit for other dependents, the dependent care credit/exclusion of dependent care benefits, the dependent care credit/exclusion of dependents care benefits and the EITC.
However, there is an exception to the general rule. Divorced parents, or those who have lived apart for the last six months of the calendar year can both claim the child for certain exemptions/credits. A non-custodial parent can claim the child for purposes of the child tax credit/credit for other dependents. The non-custodial parent claiming the child for the child tax credit/credit for other dependents does not prevent the custodial parent from claiming the dependent care credit and the earned income tax credit.
I receive payments from my spouse as part of my divorce, is this taxable income?
It depends on the nature of the payments you are receiving. Payments made to equalize the marital estate are not considered taxable income. Maintenance received pursuant to a divorce that was finalized prior to January 1, 2019 is taxable income. Maintenance received pursuant to a divorce that was finalized after January 1, 2019 is not taxable income. However, the IRS and the courts have become adept at recognizing when parties try and circumvent the system by misrepresenting the nature of payments between ex-spouses. Courts have ruled in the past that “equalization’’ payments that are in fact payments made in the nature of support can be considered maintenance for tax purposes. Consult our attorneys if you have any questions related to maintenance, taxes on maintenance or the modification of maintenance payments.
