Characterizing maintenance and child support jointly as family support allows the total payment to be tax deductible by the payor and taxable to the recipient spouse. The entire payment is treated the same as maintenance. In order to take advantage of the classification of maintenance and child support as family support, the following criteria must be met pursuant to Sec. 71 of the Internal Revenue Code:
- The payments must be cash, i.e., checks or money orders.
- The payments must be pursuant to a divorce or separation agreement.
- The parties must not be members of the same household at the time the payments are made.
- There is no liability to make a payment after the death of the payee spouse.
A family support agreement must be carefully drafted to avoid future tax consequences.