Divorce Alimony Child Support

Divorce Papers > Divorce Alimony > Divorce Alimony Child Support

When couples seeking divorce begin negotiations for a settlement, the maximum anxiety is experienced when the issues like child support and alimony prop up. In reality, the resolution of these issues is an easy task. For most families, the minimum amount needed for child support is very specific and simple for computation. The fears about alimony are very unrealistic.

It must be noted that the IRS (Internal Revenue Service) treats the issues of alimony and child support very differently. When there is very less income or money that can be disbursed by one partner to other, discussion of child support gets priority. In divorce law, there is an important principle that the best interests of the child must be attained. Accordingly, initially provisions are made to ascertain the fulfillment of the requirements of the children. Later, the topic of alimony is taken for discussion.

Let us assume that a parent is the custodian of a child and has to stay at home to take care of the child. In this case, such a parent is offered divorce alimony for a specific period of time.

Highlights of Divorce Alimony Child Support

  • Divorce alimony is a tax deduction for the payer spouse and taxable income to the recipient
  • Due to the fact mentioned in the previous point, if the difference between the incomes of the spouses is considerable, the couple opts for an alimony settlement. The explanation is that the wealthy partner is benefited due to the tax deduction and the poor partner is benefited due to a reasonable income hike with minimal tax
  • Child support is not a tax deduction for the payer spouse nor it is included as taxable income by the recipient
  • If a spouse aims to obtain child support as tax free income, then it must be distinctly labeled "child support" and should be paid separately from any other settlement amount
  • A spouse qualifies for alimony deduction only when it is paid separately from child support or any other sort of payment

Example of Divorce Alimony Child Support

Let us consider the following 3 examples of divorce alimony and child support.

  • Child Support of 500 USD and Monthly Alimony of 5,500 USD: Total 6,000 USD
  • Child Support of 1,000 USD and Monthly Alimony of 4,500 USD: Total 5,500 USD
  • Child Support of 2,500 USD and Monthly Alimony of 2,500 USD: Total 5,000 USD

Let us assume that the husband and wife are in the combined federal and state tax bracket of 35 percent. It is implied that after taxes the recipient will have 100 percent of child support and 65 percent of monthly alimony.

Thus, the yields of the above examples after payment of taxes in that order are as follows.

  • 4,075 USD
  • 3,925 USD
  • 4,125 USD
Thus, the recipient of this money would be at an advantage in accepting the last example (i.e. 4,125 USD), which surprisingly is the least total amount prior to payment of taxes (i.e. 5,000 USD).

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