Michigan estranged couples may need guidance when it comes to evaluating the tax consequences of divorce settlement offers. In cases where there is flexibility around the amounts of alimony and child support, the decision as to these amounts may have a significant impact on the taxes of the parties. From a tax perspective, child support and alimony are very different things.
When two people in Michigan separate or get a divorce, one might owe alimony to the other. While alimony is usually tax-deductible, there are several conditions that must be in place for a person to claim that deduction. The parties must live separately, and the separation or divorce agreement must not specify that the payment cannot be taxed or deducted. The arrangement must end on the death of the person receiving the payments. Finally, the alimony must be part of the separation or divorce agreement.