Claiming Support Payments

The recipient of taxable child or spousal support payments must report those amounts as income and pay the tax.

Support for Spouses. Payments made to a spouse or common-law partner are taxable to the recipient and deductible by the payor. In the year of separation or divorce, however, the payer may claim either the deduction for support or the spousal amount, but not both. The only way for the recipient to avoid this tax status is to receive a lump sum, in which case the payment is neither deductible nor taxable.

Making Instalment Remittances. The spouse who receives the taxable amount will often be unprepared for the tax consequences when a large balance due is due on April 30. In addition he or she may need to pay quarterly instalment payments on this income in the year after it is first paid and reported. This should be discussed before the separation or divorce papers are finalized to ensure the net tax result intended is actually paid and received.

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Excerpted from Jacks on Tax. © Knowledge Bureau, Inc. All rights reserved.