Question

Jack and Donna were divorced in 2015 and have been living apart ever since.  The divorce decree required Jack to pay Donna $20,000 of alimony each year for as long as she lived, and $8,000 of child support each year until 2029 when their son would turn 21. So he was supposed to pay a total of $28,000 in 2020, but he only paid her $18,000. What a deadbeat! He swears he'll pay her the rest as soon as he gets a raise at work. Anyway, how much can he deduct on his 2020 tax return under the tax rules that apply?  

Answer 1

Answer.

Jack and Donna divorce settlement dated 2015 states that Jack must pay Donna $20,000 of alimony each year for as long as she lived and $8,000 of child support each year until 2029 when their son would turn 21.

If he paid the total of both yearly payments ($28000), he can deduct $20000 as alimony on his 2020 Tax Return and she must report the $20000 on her 2020 Tax Return as alimony received.

However, if he only paid $18000 in 2020, $8000 of that amount is child support. Therefore, he can only deduct $10000 ($18000-$8000) as alimony on his 2020 Return and she can only report $10000 as alimony received on her 2020 Return.

Therefore Jack can deduct only $10000 on his 2020 tax return under the rules that apply.