Where to declare alimony in the IRS? And what amount can the person paying it deduct? Clarify these and other doubts in this article.
A child support has IRS implications both for the parent who receives it, who has to declare it as income, and for the parent who pays it, who can deduct this expense from his collection.
When submitting the IRS declaration, the tables and annexes to be completed are therefore different. Later on, we will explain the procedure in each of the situations. But before that, let’s see what alimony is and in what situations it is due.
Alimony: what the law says
Parents are obliged, by law, to guarantee adequate maintenance for their children in the event of divorce, legal separation of persons and property, declaration of nullity or annulment of marriage.
In these cases, “the maintenance owed to the child and the way of providing it will be regulated by agreement of the parents, subject to approval”, as underlines the nº 1 of article 1905 of the Civil Code.
Alimony is, therefore, a benefit, paid in cash, by the parent who has not been granted custody in order to guarantee the subsistence of the child or children.
Despite the name, alimony refers to “everything that is indispensable for sustenance, housing and clothing” and, in the case of minors, it adds
“instruction and education” (article 2003 of the Civil Code). When the young person has not yet completed academic or professional training, the pension is maintained until the young person reaches 25 years of age (nº 2 of article 1905 of the Civil Code).
In addition, the concept of maintenance also covers expenses relating to the safety and health of children, as can be concluded from the provisions of article 1879 of the Civil Code.
The amount of the pension is determined on a case-by-case basis and depends not only on the specific needs of the child, but also on the economic capacity of the parent who is obliged to pay it.
In the absence of an agreement between the couple regarding the value of this pension, the determination of the installments to be paid will be up to a Court, and the value of the alimony is updated annually, with an increase that follows inflation.
In the event of non-compliance, the person who is legally obliged to pay maintenance may have the amount of maintenance deducted from his salary or other forms of income (article 48 of Law no. 141/2015, of 8 September).
If this is not possible, it is the State that assumes responsibility for ensuring payment, through the Guarantee Fund for Maintenance Due to Minors (FGADM), until the young person reaches 18 years of age. The installments payable by the Fund are fixed by the court.
Alimony in the IRS: clear your doubts
On the one hand, alimony is considered “pension income” (article 11 of the IRS Code) and is therefore subject to IRS taxation. As such, the parent who receives iteven if you are unemployed, have to declare the total amount received in Table 4A of Annex Awith code 405 and the TIN of the payer of the installment.
On the other hand, for the parent who does not have custody, this benefit is not an income but an expense, which can be deducted from the IRS collection.
Thus, as provided for in art.º 83.º-A of the CIRSthe parent can deduct, without limit, his tax “20% of the amounts demonstrably supported and not reimbursed in respect of child support charges” to which he is bound by a court judgment or agreement.
To do this, you must fill in the table 6A of Annex H of Model 3, indicating the tax identification numbers of the beneficiaries of the pensions, as well as the respective value.
However, if you choose to do so, you will no longer be able to deduct children’s expenses and the flat-rate deduction. This is because these deductions cannot be accumulated with the alimony deduction.
What about shared custody?
For parents with shared custody, there may be a division of the children’s expenses in the IRS and also the fixed deduction. In this case, the dependents live in alternate residences and custody is duly provided for in the agreement regulating the exercise of parental responsibilities.
Since 2019, joint custody parents can choose the percentage they want to deduct from their children’s expenses, as long as the total represents 100%.
For example, the mother can deduct 60% and the father 40% of the maximum limit for the expenses in question, indicating, at the IRS, the Taxpayer Numbers (NIF) of the dependents and the ex-spouse in the 3D table, as well as children’s education and health expenses in Table 8 of Annex H.
If minors are under the care of a single parent, this benefit will be used by the parent with whom the dependents live.
Article originally published in July 2019. Last updated in February 2023.