North Carolina couples who are ending their marriage often have to make difficult decisions about asset division and ongoing maintenance payments. These issues can become even more challenging if they have children.
It is not unusual in a divorce for one spouse to make ongoing payments to the other either to support their shared children or as a way of helping the former spouse maintain his or her standard of living. However, the law treats support payments very differently depending on who they are intended for.
Child support payments are intended to provide for the needs of the children. These amounts are not considered to be taxable income for the parent receiving the money, nor are they a tax deduction for the parent writing the checks. Alimony payments are different. These funds are for the support and maintenance of the estranged spouse who, in most cases, has fewer assets and less earning capacity than the other. These payments are taxable income to the recipient and are deductible for the person who is making them.
In some cases, there may be certain tax advantages for both parties if they are able to negotiate a combination of spousal maintenance and child support. Depending on the couple’s total financial picture, and their willingness to work together, both sides may be able to take advantage of tax breaks so that each financially recovers from the divorce more quickly.
Individuals who are going through a divorce may benefit from speaking with an experienced family law attorney. Counsel can review the client’s case and make recommendations regarding property division and support payments as well as other applicable issues.