When you are planning to divorce, financial uncertainties are often a concern. Understanding how child support and alimony payments may impact your taxes is important for both parties.

Impact on Taxes on the Payer

Alimony or spousal support is a payment from one spouse to the other after the divorce. Pursuant to the Tax Cuts and Jobs Act, if your divorce is finalized after January 1, 2019, the spouse paying alimony cannot deduct it from their taxable income. Oklahoma follows the federal law with its state regulations, and the payer of spousal support also cannot deduct the payments from state taxes.

Impact on Taxes for the Recipient

If an alimony agreement was finalized after January 1, 2019, the recipient is not required under federal or state law to report spousal support as taxable income. While this tax change has simplified tax filings for recipients, it also means a potential reduction in payments may occur since the payer no longer receives a tax deduction.

Child Support

Impact on Taxes for the Payer & Recipient

Child support is determined pursuant to state guidelines, so conferring with an Oklahoma family law attorney is critical. Oklahoma child support focuses solely on the needs of the child, so the child support payments are a non-taxable event. As a general guide, the parent paying child support is not allowed to deduct child support payments from their taxable income, and the parent receiving child support payments does not report it as income.

It is also important to note that receiving child support does not reduce your eligibility for certain tax credits. If you are the child’s custodial parent, you may still qualify for tax benefits such as:

• Filing your status as head of household
• Earned Income Tax Credit
• Child Tax Credit
• Child and Dependent Care Credit

Only one parent is allowed to claim the child as a dependent on their taxes. The custodial parent typically claims the child as a dependent, but the non-custodial parent can claim the child if the custodial parent gives them the right by signing IRS Form 8332.

Plan for Tax Impacts in Your Divorce Settlement

The impact on your taxes is a critical consideration when you are getting divorced. Consulting with an experienced Oklahoma family law attorney ensures you negotiate a better divorce settlement, protecting you financially as much as possible. The last thing you want is to have negative financial surprises after your divorce is final.

Contact Babbit, Mitchell & Ogle Today

Every family law matter is unique but understanding what Oklahoma courts consider in your case is critical. Whether you need help dividing assets or seeking custody of your children, our family law attorneys can guide you through the process.

If you are looking for a family law attorney, contact BMO Law for a consultation. We aggressively fight on behalf of our clients. There are long-term implications for those affected by a family law case, and we are here to protect your best interests. Call us at (405) 692-7676 to schedule your appointment.

At BMO Law, you are not just getting one attorney, you are getting a team!