HERBERT & COMPANY
Chartered Professional Accountant
Tip of the Week
Alimony, Maintenance & Child Support Payments
Alimony and maintenance payments, now referred to as support payments, are deductible by the payer and therefore must be included in the income of the recipient, provided certain conditions are met. Generally, the couple must be living apart, both when payments are received and throughout the remainder of the year. Payments must be made periodically, either directly to the recipient or to a third party under an order, decree, judgement or a written separation agreement.
Payments made prior to the date of an order, decree, judgment or written separation agreement are also deductible, but only if the order or agreement specifically provides that earlier payments in the year or the immediate preceding year qualify.
Child support payments are treated differently however. For written agreements and court orders made on or after May 1, 1997 payments are not deductible by the payer nor need to be included as income by the recipient.
Regardless of whether the payments are taxable or not, they must be reported on your personal tax return.
The payor reports all support payments paid out (alimony, maintenance and child support) on line 21999. The deductible portion of the payments (if applicable) is to be reported on line 22000.
The recipient reports all support payments received (alimony, maintenance and child support) on line 12799. The taxable portion of the payments (if applicable) is to be reported on line 12800.
Questions? Call or email today!