“Legal Services for Your Needs: Hoiberg Group”

1. Taxpayers need to update their tax withholding and may need to make estimated tax payments when they divorce or separate.
2. Alimony or separate maintenance payments may be deductible by the payer and must be included in income by the recipient.
3. The parent with custody of a child can generally claim the child on their tax return, and child support payments aren’t deductible or taxable. – Not all payments under a divorce or separation instrument are considered alimony or separate maintenance.
– Alimony and separate maintenance do not include child support, noncash property settlements, payments that are part of community property income, payments to maintain the payer’s property, use of the payer’s property, or voluntary payments.
– Child support is never deductible and isn’t considered income, and if a divorce instrument provides for alimony and child support, the payments apply to child support first.
– Transfers of property to a spouse or former spouse because of a divorce generally do not result in recognized gain or loss, but may need to be reported on a gift tax return.

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