Understanding the Tax Implications of Unallocated Support

Posted on Feb 1, 2011 by Hofheimer Family Law

Unallocated support-also referred to as family support or unallocated alimony in other states-offers families an additional option for allocating support payments following a Virginia divorce. Many couples that elect to settle on unallocated support payments instead of separate child support do so because of specific financial conditions, such as the taxable income of both spouses.

Traditional support payments are taxable for the recipient spouse, and child support is not.
When you receive support payments with portions specifically allocated towards child support and spousal support, you are only responsible for paying taxes on the spousal support, not the child support portion.

Family support payments, on the other hand, are fully taxable for the recipient.
In most cases, the spouse that receives the support is in a lower tax bracket than the paying spouse, and therefore, there may be an economic benefit for the family as a whole. A Newport News divorce attorney whose practice is dedicated to helping women can help you understand all the specifics before you decide on the route that would be best for you and your children.

In most scenarios, family support generally benefits the payer, so make sure you fully understand all the tax consequences of your actions before making any decisions. Try to avoid unwittingly accepting unallocated support offers that might have negative tax implications for you. You’ll want to first discuss your situation with your tax specialist, as well as your Newport News divorce attorney in order to learn about the impact of family support and unallocated alimony.

Contacting a Newport News Divorce Attorney

With all the issues you have to tend to during your Virginia divorce, it’s important to not overlook financial matters that may later affect you. At Hofheimer Family Law Firm we are committed to providing you with the experience and compassion you deserve and the successful results you need to move on with your life. Request a FREE copy of our divorce guide for women in Virginia, or reserve your seat at our monthly divorce seminar – 757-425-5200.