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Tax liability for child support and alimony payments in D.C.

On Behalf of | Oct 21, 2021 | Tax Law |

Divorce is a challenging process and can quickly turn ugly for the involved parties. According to the American Psychology Association, first-time marriages have a 50% chance of ending in divorce. Divorcing couples experience major challenges in matters concerning child custody, child support, property division, and the most common source of disagreement, alimony. 

While divorce is an uncomfortable topic for many, including tax advisors, it’s essential to understand the tax implications, especially for high-net-worth couples. Here’s what you need to know about tax liability for child support and alimony payments.

Are alimony payments deductible in D.C.?

According to the 2017 reforms on Tax Cuts and Jobs Act, alimony payments are not deductible for the supporting spouse. The new rules apply for divorces finalized after December 31st, 2018. However, the receiving spouse has no obligation to report alimony payments received. For example, if a spouse earns $100,000 per year and pays $30,000 as alimony, the entire $100,000 is subject to taxation. On the other hand, the receiving spouse doesn’t have to declare the $30,000 as income.

There are three types of alimony:

  • Permanent alimony
  • Rehabilitative alimony
  • Temporary alimony

To qualify for alimony in D.C., the requesting party must show that they need financial support and prove that the other party can pay. If the case is deemed eligible, the court will issue an alimony order to the supporting spouse stating the type of alimony, the amount, and duration.

Is child support taxable in D.C.?

In the District of Columbia, child support is calculated using the income shares model. The total amount payable is calculated as a percentage of each parent’s income and paid to the custodial parent. 

Child support payments are not tax-deductible. In the event that one parent has no income, the non-custodial parent cannot deduct child support from their declared income. The recipient parent, however, doesn’t have to declare child support received as part of their income.  

Although the legal age in D.C. is 18, child support is payable until the child attains the age of 21 or is emancipated. This includes the child getting married, joining the military, or being self-supporting.

Back child support tax implications in D.C.

Back child support, also known as arrearage, is the amount owed by the supporting parent for failure to pay child support. Unlike normal child support, back child support is taxable for the recipient parent.

If arrearage is still owed when the child is emancipated, the supporting parent has a legal obligation to make payments until the balance is cleared. A court can hold them in contempt for failure to pay.