George pays Mary $50,000 each year as part of what the courts call alimony.
The amount is reduced to $30,000 each year once Tommy, their son, reaches 21
or dies. How much of the payment, if any, is considered child support for tax
purposes?
Answer & Explanation
For tax purposes, the Internal Revenue Service (IRS) distinguishes between
alimony and child support. Alimony is generally deductible by the payer and
taxable to the recipient, while child support is neither deductible by the payer
nor taxable to the recipient.
In this scenario, George pays Mary $50,000 each year as alimony. However, this
amount reduces to $30,000 once Tommy reaches 21 or dies. This reduction in
payment is contingent upon a condition related to their son Tommy.
According to IRS rules, if any portion of an alimony payment is reduced due to
a contingency related to a child (such as reaching a certain age), that portion of
the payment is considered child support for tax purposes.
The amount is reduced to $30,000 each year once Tommy, their son, reaches 21
or dies. How much of the payment, if any, is considered child support for tax
purposes?
Answer & Explanation
For tax purposes, the Internal Revenue Service (IRS) distinguishes between
alimony and child support. Alimony is generally deductible by the payer and
taxable to the recipient, while child support is neither deductible by the payer
nor taxable to the recipient.
In this scenario, George pays Mary $50,000 each year as alimony. However, this
amount reduces to $30,000 once Tommy reaches 21 or dies. This reduction in
payment is contingent upon a condition related to their son Tommy.
According to IRS rules, if any portion of an alimony payment is reduced due to
a contingency related to a child (such as reaching a certain age), that portion of
the payment is considered child support for tax purposes.
