When the marriage of a Texas couple comes to an end, one of the former spouses may end up obligated to pay alimony, child support or both. Alimony exists to provide for a spouse that may have made sacrifices in their career to take care of their family and ensure that they are able to provide for themselves financially following a divorce. Child support ensures that the custodial parent has the funds to raise the couple's children.
While child support is neither tax deductible by the payer nor included in the recipient's income, alimony may be tax deductible under certain circumstances. Whether or not alimony is deductible depends on if it meets IRS standards, and the fact that it is characterized as such is not necessarily dispositive.
For spousal support payments to be considered alimony for tax purposes, they must be made in a cash or cash equivalent form. Payments must be made to an ex-spouse or to someone acting on the ex-spouse's behalf, and the payments must be ordered in a divorce or separation decree. Further, an agreement cannot state that the payments are nontaxable or nondeductible.
When someone ends their marriage, it is likely that the outcome of a divorce will have a significant impact on their finances for years to come if alimony has been ordered. Therefore, those who expect to be ordered to pay spousal support may want to speak with a family law attorney in order to ensure that the way that it is framed in the divorce decree is in accord with IRS regulations. Similarly, a person who expects to receive alimony will need to know that it is considered income for tax purposes if it complies with those regulations.