Taxpayer asks:
If my husband has been making voluntary payments to his ex-girlfriend for child support, how is that treated for tax purposes? The purpose of the payments are for child support, and he has paid taxes on them.
I read on one of the various lawyer websites that if there is no court order for child support, then the person receiving it has to report it as income -> and therefore pay taxes on it. Is this true? Thanks!
taxgirl says:
Gosh, people are generous. First, a question about voluntary spousal support, now this one about voluntary child support.
Child support payments are tax neutral. That means that there are no federal income tax consequences for making or receiving qualified child support payments.
I guess the question then hinges on whether voluntary child support payments are actually considered child support payments at all or possibly, gifts. Either way, there should be no federal income tax consequences upon receipt.
However, depending upon the nature and the amount of the payments, they could qualify as gifts for federal gift tax purposes. Gifts over the annual exclusion – currently $13,000 per person per year – would be considered taxable to the extent that the payments are not otherwise excluded (such as tuition or medical expenses paid directly to a medical or educational institution). Keep in mind that gifts are taxable to the donor, not the recipient.
Consulting with a tax professional in these situations, which are very fact-specific, is never a bad idea.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
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