Anyone have a link to information showing how people are supposed to complete their CSS Profile.
Is non-taxable spousal support reported as income?
What is “non-taxable spousal support”.
There is a question on the profile that specifically asks for spousal support. Fafsa too.
Profile is completed online, and there are clickable links for many of the questions that provide instructions on how to answer the question. There is also an “Instructions” link on the site that provides instructions for the questions all in one place. The question “how are people supposed to complete Profile?” is very generic. If you’re wondering how to get started, go to the website linked below and create an account. If you have a specific question and post it in the Financial Aid forum here, you will get help.
Once more…what is “non-taxable spousal support”? Under what circumstance would spousal support not be subject to taxes.
I am not a CPA or lawyer, but I understand in some divorces the settlement stipulates the support is maintenance payments, not taxable by the spouse who receives it (thus not deductible by the spouse who pays it).
What’s the difference between “maintenance payments,” “spousal support,” and “alimony”?
In my state, maintenance and alimony are the same thing, but the official, court- and legislature-approved term now is maintenance. I assume spousal support is the equivalent.
I’ll punt. I think for fafsa purposes, you need to lost the “untaxed spousal support”.
@kelsmom have you ever encountered this one?
Appears it is just an agreement to not have the alimony taxed or deducted. FAFSA and CSS probably do not recognize this agreement and just want any money changing hands as support to be reported. It would really be no different than if your mother was giving you money as support - you are supposed to report money received and ‘otherwise not reported’ on the FA forms.
However, the parent paying the support (if it is a parent and not a second spouse paying after a second divorce) should get to note the payments on his/her CSS form. It should be a wash.
@twoinanddone no wash if the school does not require the non-custodial parent form…
I didn’t think there were that many schools that don’t require the NCP form.
There are!
In a divorce there may be other payments that have to be paid from one spouse to the other at the end of the marriage. These are designated as “equalizing payments” or other types of non-alimony payments. These payments are NOT deductable by the person paying nor are they taxed to the person receiving the payment. It has to do with the definition of “spousal support” and lawyers have to carefully make sure that a payment does or does not qualify as spousal support keeping in mind the tax ramifications.
Any CPAs or Financial Planners versed in this that can weigh in?
Weigh in on what? Non-taxable spousal support should be reported as income to the recipient on the Profile, just as if a relative or friend had provided financial assistance. If you doubt the answer, ask the financial aid office at the school(s) where you will be submitting the form.
It’s not for me. Do you have a link that outlines that?
It is NOT income if it is the result of a division of property that is determined to belong to BOTH the husband and the wife but for some reason has to be transferred from one to another at the time of the divorce. It BELONGS to the person receving it - it is not being EARNED by that person at that time.
There is a confusion of terms in the question. There is no such thing as “non-taxable spousal support.” Spousal support (ie monthly payments from one spouse to another after a divorce for a limited or unlimited amount of time) are taxable as income to the recipient. HOWEVER there are other payments which are NOT spousal support which for reasons addressed above would be NON-TAXABLE. But it can’t be both SPOUSAL SUPPORT and NON-TAXABLE.
We just did the CSS last night and child support/spousal support was broken out into specific questions, so I don’t think it’s too confusing once you get in there.
I receive child support (not spousal support, which is taxable) and that’s non-taxable for me, and there were specific questions addressing it (so no need to include it in my income, but I did report it in the appropriate place).
But it appears it can be by agreement. The IRS cares that it is reported as income somewhere if it is deducted somewhere else, but allows you to designated it as not deductible/not reportable. From Publication 504: