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maintenance payments in Ireland

Tax Tips on Maintenance Payments in Ireland

Introduction

If you are separated, you may make maintenance payments to support your former partner or children (or both) or receive maintenance payments from your former partner. In this tax tip, we provide advice on navigating this complex and very important subject.

Understanding Maintenance Payments

Maintenance payments can be either voluntary or made under a legal agreement. They can be for the benefit of a former partner or for the benefit of a child.

  • Former Partner: A former partner includes a separated or former spouse or civil partner, or a former cohabitant with whom you lived:
    • For 2 years if you have children together
    • For 5 years if you do not have children together

Legal Framework in Ireland

Legally enforceable maintenance payments are payments made regularly (weekly, monthly, or annually) to a former partner under:

  • A court order
  • A deed of separation
  • Any other legal commitment (such as a covenant or trust)

These payments may also include obligations like mortgage payments on behalf of a former partner. Please refer to the Courts Service Maintenance Page for more legal information.

Option to be Taxed as a Married Couple

If you have a legally enforceable maintenance agreement, you and your former spouse or civil partner can choose to be treated as a married couple or civil partners for tax purposes. This option allows maintenance payments to be ignored for tax purposes, and you are assessed on the basis of separate assessment upon request to Revenue.

Tip 1: Making Maintenance Payments

  • Legally Enforceable Maintenance Payments: You can deduct these payments from your taxable income. Tax relief is available for payments to a former partner, but not for payments benefiting children, unless choosing the married couple tax treatment.
  • Voluntary Maintenance Payments: These payments do not qualify for income tax deductions.

Tip 2: Receiving Maintenance Payments

Tip 3: Voluntary Maintenance Payments and Capital Acquisitions Tax (CAT)

Please see Revenue for further guidance or contact Anytime Tax Refunds Limited for advice.

Tip 4: Records and Documentation

  • Keep detailed records of all payments and receipts.
  • Maintain a register of all legal documents received.

Conclusion

The tax treatment of maintenance payments hinges on whether they are legally enforceable or voluntary. Taxpayers should review their obligations annually.

Contacts

For further advice and information, contact:

Frequently Asked Questions (FAQ)

  1. What are Maintenance Payments?
    • Maintenance payments are financial contributions made by one spouse or partner to another following a separation or divorce to support the recipient and any children involved.
  2. Who is Eligible to Receive Maintenance Payments in Ireland?
    • Typically, the parent with primary custody of the children or the financially dependent spouse is eligible.
  3. How are Maintenance Payments Calculated?
    • Payments are based on income, recipient needs, and the standard of living. Professional advice can assist in this process.
  4. Are Maintenance Payments Taxable?
    • Legally enforceable payments to a spouse are tax-deductible for the payer and taxable for the recipient. Child support payments are neither deductible nor taxable.
  5. Is Legal Representation Necessary for Maintenance Payment Issues?
    • While not always necessary, legal advice ensures compliance and protection of rights.
  6. What Documents Should I Keep for Maintenance Payments?
    • Keep agreements, payment receipts, communication records, and court orders.
  7. How Often Should I Review Maintenance Payments?
    • Review annually or with significant financial changes.
  8. Where Can I Get More Information About Maintenance Payments?
    • Visit government websites, legal forums, or consult family law professionals.

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