What happens when a support obligor shorts his alimony and child support payments and then tax time comes around? Of course, since alimony is deductible to the payor, he/she is likely to want to claim that most or all of the payments were alimony in order to get the deduction. Inevitably, if the recipient doesn’t report the same amount as alimony on her tax returns, then the IRS will inevitably kick both tax returns.
This was exactly the issue in Joseph L. Becker, TC Summ. Op. 2015-2 (Tax Ct.), a recent United States Tax Court opinion emanating from California. In that case, the court determined that child support takes precedent. Specifically, the Court held:
The parties do not dispute that any spousal support received by Becker would be considered alimony under section 71. The issue arises over how much of petitioner’s payments should be allocated towards alimony as opposed to child support. Petitioner admits that the amount he claimed on his 2011 tax return as an alimony paid deduction also included child support payments and so the amount would need to be adjusted accordingly. By his calculation, he paid $5,462 in spousal support and should be entitled to that amount as a deduction.
Petitioner does not take into account section 71(c)(3), which provides that where the payments actually made are less than the amounts specified in the divorce instrument for alimony and child support, then those payments are considered to have been made towards the child support portion first and will only be allocated towards the alimony portion once child support has been fully paid. See Proctor v. Commissioner, 129 T.C. 92, 94-95 (2007); Blyth v. Commissioner, 21 T.C. 275, 279 (1953). …
Simply put, if a support obligor pays less than the full amount of alimony and child support, the payments will be allocated by the IRS to child support first. From a policy standpoint, this probably makes sense.
Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Practice Group of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Roseland and Morristown, New Jersey offices though he practices throughout New Jersey. You can reach Eric at (973)994-7501, or email@example.com.