If you are separated and you pay your ex-wife and children, you should consider how to pay less in the IRPF. If, instead, you are the recipient of a pension, you should ask yourself whether you should include that money in your income or not. In this article we will give you the keys to these two situations, alimony and with a compensatory pension.
Difference between alimony and compensatory pension
Alimony and compensatory pension are not only different from the tax level, but even those who perceive it are often different.
Alimony is the money that is paid to cover the expenses of the children, not only in food, but also in housing, clothing or training until they are of legal age or complete their studies, depending on the divorce agreements or which establishes the judge.
The compensatory pension, on the other hand, is the money that goes to the ex-spouse to cover the economic imbalance that can occur after a separation. Usually established when one part earns a lot more money than the other.
Alimony pension in Personal Income Tax
On the one hand, the person who pays child support in favor of their children can not deduct that money or reduce their taxable income. However, you may apply a lower tax rate for that amount (usually 2%). In addition, if the pension is lower than your General Liquidation Base, the tax rate scale will be applied separately, which can mean a saving, especially for higher incomes. These amounts should be included in box 471 of the income.
On the other hand, the money that is received for the children is exempt from declaring itself in the income as long as it has been fixed by a firm judicial sentence or a divorce agreement. It is imperative that there is legal documentation to prove it, otherwise, that money should be taxed in the Tax on Inheritance and Donations. If the maintenance is not intended for the children, but for other relatives, it should be declared as a return of work and include it in box 001 of the income.
Compensatory pension in Personal Income Tax
If there is a judicial decision or an agreement that regulate the divorce or legal separation, the payer may deduct the money from the compensatory pension in the taxable income of the IRPF. The box in which you must enter these data in the IRPF will be the 423. But, you can only include the amount established in the sentence and provided that does not result in a negative final basis. If you pay more money, you can not deduct.
The recipient, however, must pay the pension as work income although the amount received will be exempt from tax by the IRPF. Even so, if the compensation pension money exceeds 1,500 euros and the recipient has paid more than 12,000 euros per year, they may be required to file the Personal Income Tax (IRPF).
Whether you receive a compensatory or food pension or if you pay it, contact GM Tax. We advise you with your income statement so you can present it correctly and you will not be overlooked any way you could pay less taxes.
