Page 62 - Family Law Services

A child may be living with one or both parents throughout the pendency of the divorce action and after
the final divorce order is entered into by the parties. Generally, through agreement or order of the court,
one parent will be defined as the custodial parent. Typically, the noncustodial parent will make child
support payments to the custodial parent. These payments are often determined by application of state
child support guidelines. Child support guidelines are mandatory for each state under the U.S. Code An-
notation Section 667. The child support guidelines can be flexible, and each state's guidelines will be
different. In high-income divorce actions, child support calculated under state guidelines may exceed the
child(ren)’s needs, and the application of formulas may become necessary. The CPA should be familiar
with the existence of state guidelines and should work with counsel to properly apply the guidelines ac-
cording to state law.

There is interplay between child support and alimony when payments are in arrears, specifically, when
the payor spouse is in arrears for both alimony and child support. For the benefit of the children of the
marriage, payments made to satisfy those arrearages are allocated first to child support and, after all
child support is brought current, payments are then assigned to alimony arrearages.

Some states may assign financial responsibility for college and other higher education costs for children
of the marriage. Each state's law on the requirement for spouses to provide financial support for postsec-
ondary education is different. The CPA should be aware of the considerations of the court in the state in
which he or she provides services to understand how the court will rule or reserve judgment on the issue
of children who have not yet reached college age.

Taxation of Support for Agreements Signed Prior to January 1, 2019

IRC Section 71

For orders and agreements signed prior to January1, 2019, IRC Section 71 applies. The requirements for
a payment to be included in the recipient spouse’s taxable income and deducted from the payor spouse's
taxable income are as follows:

• The payment must be made pursuant to a written divorce or separation instrument.

• The payor and the recipient may not file a joint income tax return.

• The payment must be in cash or its equivalent.

• The payment must be paid to the recipient of the spousal support or to a third party on behalf of
the recipient.

• The written agreement must not state that the support, or any part of it, is not included in the in-
come of the recipient and not deductible by the payor.

• There can be no liability to pay support after the death of the recipient spouse. fn 1

fn 1 State law may provide for such a termination.

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