Parties to a divorce often ask about the tax implications of child and spousal support. With a top federal tax bracket of 37% and top New York state bracket of 10.9%, it is important to consider the tax impact of divorce, including which party is responsible for paying income taxes on child and spousal support.
New York state tax
Under New York tax law, the party paying child support is responsible for paying state income taxes on the child support. The recipient of child support, on the other hand, does not have to pay taxes on the child support, meaning they will not have to report the child support as income on their state taxes.
As for spousal support, the party receiving payment is responsible for paying income taxes on the payment. This means the receiving party must include spousal support as income on their state taxes, while the paying party may deduct spousal support payments from their state income tax.
Federal tax treatment
Before 2019, federal tax law treated spousal and child support payments the same as New York state law – the payer was responsible for paying taxes on child support and the recipient was responsible for taxes on spousal support.
But in 2019, federal law changed to provide that the paying party is responsible for paying taxes on incomes used to satisfy child support obligations.
A knowledge attorney can assist in explaining the tax implication of child support, spousal support and any other aspect of divorce. Taxes can significantly impact the amount of funds available for child or supposal support, so understanding the tax impact is important.