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Am going to receive spousal supprt and eventually alimony and need to know if this sum has to be added to my income? Since my "husband" has already paid taxes on this money do I have to repoty as income? Appreciate any help!
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Am going to receive spousal supprt and eventually alimony and need to know if this sum has to be added to my income? Since my "husband" has already paid taxes on this money do I have to repoty as income? Appreciate any help

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Alimony is taxable to you and a tax deduction to your ex.

Child support is not taxable to you nor is it a tax deduction for your ex.

Your divorce decree should identify what exactly he is paying to you - alimony or CS.

Pete
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Am going to receive spousal supprt and eventually alimony and need to know if this sum has to be added to my income? Since my
"husband" has already paid taxes on this money do I have to repoty as income? Appreciate any help

======

Alimony is taxable to you and a tax deduction to your ex.

Child support is not taxable to you nor is it a tax deduction for your ex.

Your divorce decree should identify what exactly he is paying to you - alimony or CS.

Pete


...or both alimony and child support. BTW, "alimony" is the same thing as "spousal support".
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Alimony is income to you and is deductible by him on Form 1040, Line 31a, as an adjustment to income. (So he really isn't paying taxes on it.) You have to report the alimony on Form 1040, Line 11. Child support, on the other hand, is not income to you and is not deductible by him.
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Pete:
Your divorce decree should identify what exactly he is paying to you - alimony or CS.

foolishtomtom:
...or both alimony and child support.

That's the one that drives tax preparers nuts. When a divorce decree just lumps it all together and calls it "family support" the facts become unclear. How much is for the spouse (deductible to the payer, income to the receipient) and how much is child support (not deductible to the payer, not income to the receipient)? You've got to look at the rest of the decree, and make some interpretations. The ex spouses' interpretations will likely (always?) differ. Our big Uncle could have yet another opinion. Now you've got a question of fact to take to another court!

If at all possible, get the judge to specify the amounts for child support and alimony (spousal support) separately. This will make the facts considerably clearer. Keep in mind, however, that this is another situation where the tax considerations should color your decision and not make the decision.

--ptheland
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If at all possible, get the judge to specify the amounts for child support and alimony
(spousal support) separately. This will make the facts considerably clearer. Keep in mind,
however, that this is another situation where the tax considerations should color your
decision and not make the decision.

--ptheland


Some other factors to consider:
a) Judge should also specify when alimony ends. In my case it was either after 5 years, or immediately upon their re-marriage (guess when my ex got remarried... right: 5 years and 1 month after our divorce)
b) Judge should also specify when child support ends. Generally this is when child reaches 18, but a claus can be added that it continues until child reaches 21 if still at home and in school.
c) If there are multiple children, should specify how much to each child.
d) Make sure Judge specifies who gets to deduct which child(ren) on their tax return. This can avoid nasty situations later if same child gets deducted on two tax returns - just work out in advance how this will get handled.
e) Should also specify who pays for the child(ren)'s health insurance.
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Some other factors to consider: <snip>

All good points, foolishtomtom. Just one clarification:

d) Make sure Judge specifies who gets to deduct which child(ren) on their tax return. This can avoid nasty situations later if same child gets deducted on two tax returns - just work out in advance how this will get handled.

The IRS is going to ask you to jump through some hoops on this one. For recent divorces (the last several years - I don't have the exact dates with me) the parent with custody of the children is entitled to the exemption regardless of what the decree says. To give the non-custodial parent the exemption, the custodial parent needs to sign a form (whose number escapes the leaking memory) and give it to the non-custodial parent. If this situation applies to you, your best bet is to get the form signed while the ink is still wet on the decree.

--ptheland
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Problem I ran into on child support was idiot judge wanted to continue support after minor child entered military service. Might be worthwhile to have a statement to the effect that child support also ends upon entry of child into any branch of active military. Fortunately, state law in my home state says that support ends at that time. Might not in other states. Check your own state laws.
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The Form is 8332. You must have this form or a smililar statement signed and attached to your return or you can attach copy of certain pages (cover page, page that states you can claim the child, signature page of other parent including date) of your divorce decree or separation agreement if it went into effect after 1984 every year that you take the dependent. But you must have given at least $600 in support payments to claim the dependent.
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<<That's the one that drives tax preparers nuts. When a divorce decree just lumps it all together and calls it "family support" the facts become unclear. How much is for the spouse (deductible to the payer, income to the receipient) and how much is child support (not deductible to the payer, not income to the receipient)? You've got to look at the rest of the decree, and make some interpretations. The ex spouses' interpretations will likely (always?) differ. Our big Uncle could have yet another opinion. Now you've got a question of fact to take to another court!>>

Right you are. I wrote an article on the importance of the divorce decree about three weeks ago. The broader the documents, the more likely the chance you'll get screwd. And you could be the screwer or the screwee.

Anybody with any interest in this area of taxation should read my article in the Taxes FAQ area...showing how a poorly drafted divorce decree caused the ex-wife to pay a BUNCH more in taxes.

TMF Taxes
Roy
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<<d) Make sure Judge specifies who gets to deduct which child(ren) on their tax return. This can avoid nasty situations later if same child gets deducted on two tax returns - just work out in advance how this will get handled.>>

Not any more. The judge can say all he wants...but the IRS got tired of fighting this issue. So the custodial spouse will receive the dependent deductions. Period. The best that you can do in the decree is to require the custodial spouse to "grant" the dependents to the non-custodial spouse...as long as child support payments are kept current.

TMF Taxes
Roy
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I'd like to clarify the issue since the last answer is not entirely correct. It is not so definite, and there is a gray area. Further, the previous poster does not allow for any hope that a non-custodial parent can always sue the ex-spouse on a local level if an agreement regarding the dependent is violated. Although the IRS is tired of this issue, the IRS still does recognize explicitly written decrees. Please see Publication 17 and go to the section "Support test for children of Divorced or Separated Parents." There is an easy graph that outlines some scenarios (Figure 3-B). If the custodial parent did not sign a form 8332 or write a letter releasing the exemption, the non-custodial parent CAN still pass the support test if there is a "decree or agreement executed after 1984 that unconditionally entitles the noncustodial parent to the exemption."

And, on that note, might I suggest to any reader that the Gov. has a great site which can answer tax questions - in addition to this site. Please visit www.irs.gov and check out the Daily Digital. There is a FAQ area, you can download, order, or read publications, and now, you can ask direct questions to Customer Service Reps. who will quote you the tax law in whatever gray area you come up with.

Take care,
Toni
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<<I'd like to clarify the issue since the last answer is not entirely correct. It is not so definite, and there is a gray area. Further, the previous poster does not allow for any hope that a non-custodial parent can always sue the ex-spouse on a local level if an agreement regarding the dependent is violated.>>

You're right...the issue should most probably be clarified.

But rather than using Pub 17, let's use Publication 504...that deals with this issue directly.

First...the general rule...as I stated in my original post:

" Under the special rule, the parent who had custody of the child for the greater part of the year (the custodial parent) is generally treated as the parent who provided more than half the child's support. This parent is usually allowed to claim the exemption for the child, if the other dependency tests are met. However, see Noncustodial Parent, later.

Custody. Custody is usually determined by the most recent decree of divorce or separate maintenance, or a later custody decree. If there is no decree, use the written separation agreement.

If neither a decree nor an agreement establishes custody, then the parent who had physical custody of the child for the greater part of the year is considered the custodial parent. This also applies if a decree or agreement calls for "split" custody, or if the validity of a decree or agreement awarding custody is uncertain because of legal proceedings pending on the last day of the calendar year.

<< Although the IRS is tired of this issue, the IRS still does recognize explicitly written decrees.>>

But only if they are consistent with the issues. Pub 504 disusses those in the "non-custodial parent" section later on in the Publication. Let's take a look.

"Under the special rule, the parent who did not have custody, or who had it for the shorter time, is treated as the parent who provided more than half the child's support if:

1) The custodial parent signs Form 8332 or a similar statement agreeing not to claim the child's exemption, and the noncustodial parent attaches this statement to his or her return (see Form 8332, later)"

And this was the form that I was referring to when I stated that the custodial parent could sign away their rights to the dependent. Normally, the divorce decree allows that the non-custodial parent can claim the deduction (and the custodial parent will complete Form 8332) each year that support payments are current. It's a standard feature in most divorces. But the subject goes on...

" or

2) A decree or written agreement made before 1985 provides that the noncustodial parent can take the exemption and he or she gave at least $600 for the child's support during the year. This is true unless the pre-1985 decree or agreement was modified after 1984 to specify that this provision will not apply."

As was noted, written agreements still work as long as they were made BEFORE 1985. Because the law changed in 1986, the custodial parent became the "king" (or, more likely, the "queen" at that time). No more did IRS have to fight over the decree or any other agreements. They only had to determine who the custodial parent actually was. And that's basically what they are doing. In this case federal law will superseed any state requirements and regulations regarding support, exemptions, etc. The publication even provides an example (and note...THE EXAMPLE IS FOR 1984...WHICH WOULD BE A TAX YEAR BEFORE 1985...SO THIS IS NOT THE WAY THE LAW WORKS FOR AGREEMENTS SIGNED AFTER 1985)

"Example 1. Under your 1984 divorce decree, your former spouse has custody of your child. The decree states that you can claim the child's exemption. You provided $1,000 of your child's support during the year and your spouse provided the rest. You are considered to have provided over half the child's support, even if your former spouse gave more than $1,000."

See how it works for a "prior" agreement? Let's look at the example from the publication for a more current agreement...one that takes place after 1985:

"Example 2. You and your spouse provided all of your child's support. Under your 1988 written separation agreement, your spouse has custody of your child. Because the agreement was made after 1984, you are considered to have provided over half the child's support only if your spouse agrees not to claim the child's exemption on Form 8332 or a similar statement."

<< Please see Publication 17 and go to the section "Support test for children of Divorced or Separated Parents." There is an easy graph that outlines some scenarios (Figure 3-B). If the custodial parent did not sign a form 8332 or write a letter releasing the exemption, the non-custodial parent CAN still pass the support test if there is a "decree or agreement executed after 1984 that unconditionally entitles the noncustodial parent to the exemption.">>

Right you are...and this is where the clarification is really required. Here is what the Publication has to say on this issue:

" Similar statement. If your divorce decree or separation agreement went into effect after 1984 and it states that you can claim the child as your dependent without regard to any condition, such as payment of support, you can attach to your return copies of the following pages from the decree or agreement instead of Form 8332:

1) The cover page (write the other parent's social security number on this page),

2) The page that states you can claim the child as your dependent, and

3) The signature page with the other parent's signature and the date of the agreement. "

But please note that this ONLY applies if the non-custodial parent was given the UNCONDITIONAL right to claim the child (i.e., the exemption is not negotiated between the parents, and there are no conditions that must be met for the non-custodial parent to claim the deduction). This is not something that you see in a "normal" divorce situation...but it certainly does happen...and certainly something that you should be aware of.

But...also a word of caution from the Publication. If there is some kind of condition placed on the exemption status, the whole thing could go out the window. Here's the caution provided in the Publication:

"CAUTION: If your divorce decree or separation agreement went into effect after 1984 and it states that you can claim the child as your dependent if you meet certain conditions, you must attach to your return Form 8332 or similar statement from the custodial parent releasing the exemption. "

So as was pointed out, it's certainly not an all or nothing situation. But, as a rule of thumb, the custodial parent will claim the dependent deduction unless the custodial parent gives that exemption to the non-custodial parent. As you point out, there are certainly exceptions to the rule.

This entire issue was pointed out in the Taxes FAQ area regarding children of divorced and separated parents. I guess next time I should just lead the reader directly to those FAQs.

Thanks for the clarification...
TMF Taxes
Roy
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The IRS may be tired of this issue, but I'm more tired at this point.

I think if someone could help me with this still-grey area (to me), I'd truly appreciate it: 

When referring to "custody", is it legal custody that the IRS is referring to, [and] as per a Divorce Decree/Separation Agreement", not the actually physical custody of a child, that the IRS is referring to? 

Also, from what I think I understand(???), the legal custodial parent doesn't have to contribute any monetary support either, etc.   So the support test doesn't apply either.

In my situation, I have had "sole" custody, as stated in the divorce decree & separation agreement (a never-modified judgement by legal means and/or by any court in any state):::

so the non-custodial parent would have to have attached to his return, a signed "release for exemption", for him to be able take the dependant exemption on their tax return.  

It is also my understanding that a divorce decree is a legally enforceable judgement, and will over-ride any IRS Federal Tax Laws.  Is this correct?  It seems that I keep reading about IRS over-ruling state laws. I am confused anyway...

One more question:  In the IRS publications about this subject, the IRS states (this is not a direct quote) 'this relationship cannot violate local law'. 

Is that "quote" referring to anything in the UCCJA (a Federal Act) that would also fall under general local laws and other uniform and/or local family court rules/laws that are standing? 

Thanks for any help/clarification.  

     --Sign me, "WishICouldAffordAnAttorney"

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