·         Child support is not taxable as income to the payee spouse. 

·         Child support is not a deduction to the payor spouse.

·         Unless there is an agreement to the contrary, the primary custodial spouse gets the child's tax exemption. 

·         You may be eligible for head of household if you are the custodial parent.

·         You may be eligible for childcare credits even if you do not have the child’s exemption. 

             When parties file separate tax returns and reside in separate households, Alimony payments in cash to or for the benefit of the recipient spouse will be considered taxable income to the dependant spouse and a deduction to the supporting spouse.  Ask about the “designated payments rule” when you desire another result. 

             If there is a court order for Alimony or Postseparation Support, current IRS policy in our district requires you to file single or head of household.  (This does not apply to private agreements outside of court.) 

            Generally, a division of marital property is a nontaxable event.  (Discuss exceptions with your attorney.)  Generally, if property is transferred between spouses pursuant to an agreement or court order, it will neither be taxed as income nor allowed as a deduction.  There may be tax consequences, however, when funds are transferred from retirement plan and Individual Retirement Accounts and when marital assets are sold to third parties.  There are also traps that need to be evaluated with regard to your specific case.