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Unallocated support and tax liability

On Behalf of | Jun 8, 2017 | Child Support |

In Illinois, you may end up paying unallocated support. This is when the court combines your child support and alimony payments together. At Lois Kulinsky & Associates, LTD, we review cases all the time to see if unallocated support would be a good option for our clients. In some situations, it can help you reduce tax liability. However, this is an area of some confusion, and understanding the tax laws is important to avoid issues with the IRS.

According to the Journal of Accountancy, if you pay alimony, you can deduct those payments on your taxes, and your ex-spouse would have to pay taxes on those payments because it is considered income. This is not true for child support because it is not considered income. This is where the confusion comes in for unallocated support.

It helps to understand how alimony is defined for tax purposes because there are some distinct attributes that must be met for any payment to fall under this category. When it comes to taxes on allocated support, the most important rule is that alimony ends upon the death of the person being paid. So, in some cases, if your allocated support would end should your ex-spouse die, then you may be able to claim it all as alimony.

However, you may also run into situations where the court has already broken down your payments, so it is clear what portion is alimony and what portion is child support. In this case, you must follow what the court says. Please visit our website to learn more about alimony and family law topics.


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