Question

Which of the following statements is false?

a. once taxpayers are separated or divorced, the lower income earner / higher income earner rules for deductibility of child care expenses no longer apply.
b. if the person receiving child support payments agrees to include the child support payments in his or her own income, the person paying the child support is entitled to a deduction for child support payments made.
c. if an agreement specifies that a taxpayer is required to make both spousal support payments and child support payments and the taxpayer does not make the full amount of the required payments specified in the agreement in the year, the first amount paid (as specified in the agreement) will be considered child support and the excess (if any) will be considered spousal support.
d. if an agreement does not separately specify the amount of child support and spousal support, the full amount of the required payment is considered child support.

Answer 1

The false statement among the options provided is the one that claims a payer of child support can deduct payments if the recipient agrees to include them in their income. In general, child support payments are not deductible by the payer.

Step-by-step explanation:

The question asks which of the following statements related to taxation of child care expenses after separation or divorce is false:

• Once taxpayers are separated or divorced, the lower income earner/higher income earner rules for deductibility of child care expenses no longer apply.
• If the person receiving child support payments agrees to include the child support payments in his or her own income, the person paying the child support is entitled to a deduction for child support payments made.
• When a taxpayer is required to make both spousal support payments and child support payments but does not pay the full amount, the first amount paid is considered child support.
• If an agreement does not specify the amounts for child support and spousal support separately, the full amount is considered child support.

The false statement here is (b). Typically, child support payments are not deductible by the payer and are not taxable to the recipient. Therefore, even if the recipient agrees to include child support payments in their income, the payer isn't entitled to a deduction.