Unallocated Support Offers A Win-Win Situation
In many high-asset divorce cases, agreeing on alimony and child support payments can be challenging. Thankfully, unallocated support (also called unallocated family support) provides a solution that shifts the tax burden from the parent in the higher tax bracket to the parent in the lower tax bracket.
Combining alimony and child support payments into one unallocated support payment can be beneficial for both parties. The payer pays less support, and the receiver receives more support.
Unallocated support can be beneficial for both parents because the support payments change tax brackets. The money from one parent (who is in the higher tax bracket) goes to the other parent (who is in the lower tax bracket). Once the money is moved, it is taxed at a lower rate.
At the Law Offices of Lisa A. Ruggieri, P.C., we provide families in Wellesley and throughout the Greater Boston area the zealous advocacy they need at every step of high net worth divorce matters. Our attorneys are experienced at protecting the best interests of our clients at every stage of the process, and we can determine whether unallocated support is a good solution for you.
How Does Unallocated Support Work?
Unallocated support allows you to combine child support and alimony payments. As a result, the combined payment becomes a tax deduction for the individual who is paying the support, and the recipient is required to pay taxes on the support received.
Although child support is typically not tax deductible, unallocated support (which includes a combination of child support and alimony) can be taxable income or a tax deduction.
Unallocated support provides financial benefits for the payer and receiver.
When unallocated support is set up properly, it allows the payer to pay less than if he or she was paying alimony and child support separately. Similarly, even after the person receiving support pays taxes on the combined support, he or she still receives more money than if the child support and alimony were paid separately.
What Is The Secret To Making Unallocated Support Beneficial For Both Parties?
Like many legal or financial arrangements, the secret to making unallocated support beneficial for both parties is setting it up properly. An experienced lawyer can help ensure the provisions are drafted properly, so they satisfy both the IRS and the accountants who handle the individuals’ taxes.