In some cases, one member of a divorced couple pays "family support" instead of conventional alimony or child support. Understanding the tax implications of this type of payment is important when the time comes to file a federal income tax return, as it can impact tax liability.

“Family support” payments frequently combine spousal and child support without allocating the payments between deductible alimony and nondeductible child support.

The issue of whether “family support” is deductible as alimony has been to Tax Court on several occasions with conflicting results. However, in the most recent cases, the courts have looked at the termination requirements of alimony. Alimony must terminate on the payee spouse’s death. Most family support agreements do not include the provision for the support to terminate on the death of the payee spouse and therefore have failed to qualify as alimony in the recent court cases.

DeLong, TC Memo 2013 – An interesting Tax Court decision in 2013. In this case the Tax Court ruled the entire amount paid towards family support was deductible alimony. Caution – There are unique circumstances with this case. Even though the payments were stipulated by the divorce court as both spousal support and child support, the Court did not fix the amount of either. 

Court's Conclusion - The Tax Court first examined the issue of whether the family support obligation terminated upon the death of the payee spouse, as required to qualify as alimony. Relying on Berry, TC Memo 2005-91, the Tax Court found that Mr. DeLong had no continuing liability for the family support payments past Ms. DeLong's death.

The Tax Court noted that whether a family support obligation terminates upon the death of the payee spouse was not specifically addressed in the California Family Code. Nor had case law conclusively decided the question. In Berry, after a careful and comprehensive analysis of California law, the Tax Court found that there was no continuing payment liability past the death of a payee spouse with respect to a family support obligation. The facts of Berry were like the facts in Mr. DeLong's case, and the Tax Court found no distinguishable facts that would merit a different result in Mr. DeLong's case.

The California Superior Court hearing the Delong case indicated in a temporary and subsequent support order that the family support payments were for both spousal support and child support. It didn't allocate any specific portion of the family support payments as spousal support or child support in either of the support orders. Nor did it provide for a reduction of the family support payment when the children reach maturity.

The Court noted that the statutory directive that child support payments be “fixed” was generally taken literally. Child support cannot be inferred from intent, surrounding circumstances or other subjective criteria. (Comm. v. Lester, (Sup Ct 1961) 7 AFTR 2d 1445, 366 U.S. 299) Mr. DeLong's support orders made an unallocated award of spousal and child support. Consequently, they did not “fix” any portion of the family support payments as a sum that was payable for the support of his children for purposes of Code Sec. 71(c)(1) [prior to repeal by the TCJA]. In addition, there was no amount specified in the support orders that was to be reduced upon the occurrence of a contingency specified in the support orders relating to Mr. DeLong's children or at a time that could clearly be associated with that kind of contingency under Code Sec. 71(c)(2).