Gift tax implication If one would pay large and voluntary child support to girlfriend (have common child)?

Question

If I understand correctly, if one transfers more than $17,000 to his girlfriend (not married) with whom he has a child then that would need to be reported on his gift tax return; And would consume his lifetime gift tax exemption.

However, what If he pays large child support to her? My understanding is that it would not need to be reported as gift, but:

1. Do they need court order or can child support be voluntary?
2. Are there limits how large such child support can be?
3. Do they have to live separate?
4. Does she have to use all of that money for child needs or can keep for herself too?
5. Does it matter who claims child as dependent on their tax returns?

Answer 1

Do they need court order or can child support be voluntary?

Yes, you need a court order. Voluntary child support is called "gift". From tax perspective unless there's a legal requirement to pay - you're giving a gift.

You can gift money to your child, instead of the girlfriend (since that's your intention anyway), and then your girlfriend will be obligated to spend it to the benefit of the child or keep it in a UMTA account.

The reason to talk to the lawyer is because you can create a situation where by starting giving gifts you can no longer stop. While on one hand you'll get that order that would allow you avoiding the gift tax problem, on the other hand you'll lose the control you currently have over your finances.

One alternative would be to give money to a trust to the benefit of the child, instead of giving money to your girlfriend and calling it "voluntary child support". But IANAL, you should discuss this with a local family law specialist attorney.