Caleb and his wife were legally divorced in 2021. After the divorce, Caleb retained physical custody of their son. Caleb received the following amounts from his ex-wife, on behalf of their son or as ordered by the court through a divorce decree:

Question

Court-ordered child support of $1,000 per month.
Court-ordered alimony of $500 per month.

Answer 1

When considering the tax implications of child support and alimony, it's important to understand how each is treated under the law.

1. Child Support: The court-ordered child support payments that Caleb receives from his ex-wife are not considered taxable income. Therefore, he does not need to report the $1,000 per month ($12,000 annually) as income when he files his taxes.

2. Alimony: Prior to the Tax Cuts and Jobs Act (TCJA), alimony payments were generally considered taxable income to the recipient and deductible by the payer. However, the TCJA changed the tax treatment for divorces finalized after December 31, 2018. Since Caleb and his wife divorced in 2021, those new rules apply. Alimony payments received by Caleb ($500 per month or $6,000 annually) are not considered taxable income. His ex-wife cannot deduct these payments from her taxable income either.

In summary:

• Child Support: $1,000 per month ($12,000 annually) - Not taxable income.
• Alimony: $500 per month ($6,000 annually) - Not taxable income.

So, Caleb does not report either the child support or alimony as income on his tax return.