[Anonymous]

John and Mary were divorced last year. The divorce decree provides that John pay alimony of $10,000 per year, to be reduced by 20% on their child’s 18th birthday. During the current year, John paid $7,000 directly to Mary and $3,000 to Spring College for Mary’s tuition. What amount of these payments should be reported as income in Mary’s current year income tax return?

a. $5,600

b. $8,000

c. $8,600

d. $10,000

Choice “b” is correct. Alimony would be income to Mary while child support would not. Funds qualify as child support only if 1) a specific amount is fixed or is contingent on the child’s status (e.g., reaching a certain age), 2) it is paid solely for the support of minor children, and 3) it is payable by decree, instrument or agreement. The actual use of the funds is irrelevant to the issue. In this case, $2,000 (20% × $10,000) qualifies as child support. The other $8,000 is alimony, which would be income to Mary.

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Where did it say child support is 20%? The question said that when the child turns 18, that alimony would be reduced by 20%. However, it did not say that the 20% would go to the child, and nor did it say if the child had in fact turned 18 in the current tax year. Or am I just not getting the question?