Alimony is a form of support which is taxable to the payee spouse and equally deductible to the paying spouse, making alimony a useful tool in shifting income to the spouse in the lower tax bracket. Additionally, alimony payments can be made to third parties for the benefit of the payee spouse, enabling support agreements to be fully deductible, where they may otherwise be limited.
Tax Tip - Medical expenses and certain costs to maintain a home paid on behalf of the payee spouse can be fully deductible as alimony, rather than as an itemized deduction, which is subject to limitations.
In contrast, payments representing child support are neither includible in the income of the payee nor deductible by the paying spouse.
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