When Are Support Payments Paid Prior To An Order Or Written Agreement Tax Deductible?
These are payments made by one spouse to the other (the recipient) for the support of the recipient or children of the marriage or relationship prior to the signing of an order or written agreement. These payments will be deductible in determining the taxable income of the payor if they have certain characteristics. Payments deductible by the payor will be taxable to the recipient.
To be deductible by the payor and taxable to the recipient the prior payments must have the following characteristics:
1. The payments are made in the same year in which the order is made or an agreement is signed or in the immediately preceding full calendar year. The payments may not be paid pursuant to a preceding agreement. 2. Prior payments must have all of the attributes of spousal support payments, which means that they cannot be lump sums, they must be periodic and for the maintenance of the recipient, or they must be child support payments made prior to a commencement day. 3. The agreement or order must refer to these payments and the parties must clearly indicate that these payments are to be deductible to the payor and included in income of the recipient in the year in which the amounts were paid. Amended personal income tax returns for prior years will be necessary where there is a claim for retroactive deductibility.