Question: Why does Alimony paid by the higher-income custodial spouse not generate a tax deduction for purposes of the guideline calculation?
Answer:
This issue comes up in the context of alimony paid by a higher income spouse.
The sequence of calculations is as follows:
1. Taxes for both parties are calculated.
2. Net income is calculated for both parties, as gross income minus taxes and other deductions.
3. If the custodial spouse has higher income, then alimony paid by the higher income custodial spouse is calculated.
4. Net incomes are recalculated including the alimony paid by the higher income custodial spouse as a deduction.
5. Child support is calculated based on the recalculated net incomes, adjustments, etc.
Note that the alimony in step 3 is based on the parties’ net incomes from steps 1 and 2.
If we try to include the alimony from step 3 in the tax calculation in step 1, we would have a circular calculation.
To avoid this circularity, we simply omit the alimony paid by the higher income custodial spouse in the tax calculation.