ake the money and run takes on a whole new meaning when it comes to divorce.

With all the emotional consequences of a divorce, the tax implications are rarely the primary focus. However, an understanding of the tax aspects of the marital settlement might allow both parties to walk away with more money.

The difference lies in whether you define the money as alimony or child support. It also depends on the spouse who is supposed to receive the payments having enough faith that his or her ex will cough up the money, regardless of how it's legally defined.

Here's how it works:

The Tax Code regards payments that constitute "alimony" as tax deductions for the payer and as taxable income to the payee. Payments defined as child support are neither deductible nor included as income. They represent tax neutral transfers.

One caveat - and it's a big one: If you're concerned about an ex-spouse's financial commitment (Does the term "deadbeat dad" mean anything to you?), the courts have looked much more severely at the failure to pay child support than they have at the failure to pay alimony.

Child support is clearly easier to squeeze out of an uncooperative ex-spouse. In fact, if child support is not paid on time, the Internal Revenue Service has a program providing for the money to be paid directly out of an ex-spouse's tax refund.

Calling payments "alimony" or "child support" in the separation agreement or the divorce decree is not enough. Alimony means the money must be made to a former spouse in cash. The payments terminate when the receiving spouse dies. The money must be paid according to a written divorce or separation agreement, a decree of divorce or separation or a support agreement.

The stipulations don't stop there. The ex-spouses can't live together at the time the payments are made and none of the money can be deducted if it was targeted toward child support. For example, if the payments end or are reduced once a child marries, dies or graduates from high school or college, those funds don't count. The IRS figures, perhaps correctly, that if alimony payments stop once a child leaves the nest, then they weren't alimony. They were child support.

Even if the lower alimony payments are unrelated to the child's future, they had better not occur within six months after the child reaches legal maturity of either 18 or 21. If the payment does, the IRS assumes that it's child-related.

In addition, if you have more than one child and your alimony payments are scheduled to be changed within one year of the time each of your children reaches a specified age between 18 and 24, the amount of the change will be treated as child support.

Be very careful here - the IRS takes the position that payments that benefit a child rather than a spouse are child support, not alimony.

The complications don't end there. If alimony payments in any year are reduced by $15,000 in the first three calendar years after separation or divorce, part or all of such payments will not be considered deductible and the past payments may be "recaptured." In other words, the government would reclassify that money as income, and tax you in arrears. Not a pretty sight. The reason for this law is because the IRS is trying to differentiate between ongoing alimony payments and any one-time, or short-term settlements that arise after divorces, such as the selling of properties or other valuables.

Under current law, the tax burden on property settlements has shifted from the payers to the recipients. The spouse who receives the property is then taxed when she or he sells it.

Several tax-planning strategies present themselves based on the above rules. The bottom line is that alimony is deductible and child support is not. If the recipient is in a lower tax bracket than the payer, any increase in alimony from child support will be taxed at a lower marginal rate and deducted at the payer's higher marginal rate. This strategy gives both ex-spouses the chance to save or get more money, because of the way the government defines alimony and child support for tax purposes. It's a little tricky, but quite legal.

For example, assume the husband is paying the alimony. He has a marginal tax bracket of 31 percent, while his wife's marginal tax bracket is 15 percent. The husband plans to pay annual alimony of $10,000 and child support of another $10,000, and the wife has agreed.

This agreement would cost the husband $16,900 per year, based on the following formula:

Child support:  (no deduction):  $10,000

Alimony:  $10,000 minus $3,100 tax savings ($10,000 x .31):  $6,900

Total:  $16,900

If the husband converted the whole $20,000 to alimony, it would cost him only $13,800:

Alimony:  $20,000 minus $6,200 tax savings (or $20,000 x .31):  $13,800

He saves $3,100 over the original agreement.

But this deal isn't fair to the wife. She would now have:

Alimony:  $20,000 minus $3,000 tax (or $20,000 x .15):  $17,000

That's a loss of $1,500. But if both spouses can't get past the emotions to the bottom line, there is a compromise that helps both. The wife's loss could be offset by the $3,100 saved by the husband. All he would have to do is increase the alimony payments to $22,500. Here's how it works:

Cost to husband:  ($22,500 x .31):  $15,525

Wife:  ($22,500 x .15):  $19,125

The result equals an additional $1,375 in the husband's pocket ($16,900 - $15,525) and an additional $625 for the wife ($19,125 - $18,500)

Everybody wins except the IRS!

This concept of shifting income from a high bracket taxpayer (husband) to a lower bracket taxpayer (wife) works with property settlements as well. If a husband transfers stock that has appreciated from $10,000 to $100,000 to his wife, current law relieves him of the tax on the gain and shifts it to his wife when she sells.

To offset this tax, the recipient spouse should negotiate an increased payout to absorb, or reduce, the other spouse's net tax savings on the transfer of appreciated property.

Remember, while any marital dissolution is painful, both emotionally and financially, a recognition of the tax aspects of such a dissolution might minimize some of that pain.