[quote]My fiance was set up to pay non-allocated family support/alimony in his divorce decree by his ex-wife and her attorney. It was clearly dictated in the decree that no alimony was to be paid - and that both husband and wife had waived their rights to it. He has been paying the family support monthly as his child support, and he has been instructed to deduct the amount in full on his taxes. I have also investigated the 4 requirements of Section 71(b) (1) and this cash payout clearly qualifies as Alimony.
Since he clearly stated that he wouldn't pay alimony in the contract, and child support isn't tax deductible - how did this contract come to be? Is this collusion? And can it be terminated? Any advice is appreciated. Thanks.
Well, he could go back and have the wording changed to child support (he's not going to be able to stop paying child support until emancipation) and NOT be able to deduct it at all.
That's pretty much up to him. Personally, I would leave it the way that I wouldn't have to pay taxes on it.