Safe, Secure and No ObligationChild Support and Taxes
One of the most frequently posed questions by separated parents is whether child support is taxable income or tax-deductible.
The general rule is that child support is neither tax-deductible nor taxable and should not be included as an expense or income by either parent. The Internal Revenue Service (IRS) considers child support tax neutral.
Child support payments are considered a personal expense of the parent for the child for tax purposes, and since personal expenses are not tax-deductible, neither are child support payments.
Should you have any questions about your child support case or any broader family law issues, please don’t hesitate to contact Family Court Direct. Our team can provide you with resources and advice and represent you in court if necessary to address your specific situation.
Read on to find out more about child support and taxes.
What Is Child Support, and Is Child Support Tax Deductible?
Both parents have an ongoing legal obligation to support their children. It doesn’t matter if the parents are married, cohabitating, or divorced. Child support is paid so that the child’s daily expenses, such as clothing, rent, and food, are covered.
Child support is often contained in a court order which determines how much money one parent should pay the other to contribute to the child’s right to parental support. Usually, the non-custodial parent is ordered to pay the custodial parent.
The right to receive child support belongs to the child, and the court determines the amounts to be paid.
Are There Other Deductions I Can Claim Related to Children After Divorce?
Generally, the dependency exemption and child tax credit are two significant deductions designed to reduce child-related tax obligations.
These two deductions enable parents to reduce their federal income tax liability.
The Dependency Exemption
Where the parents are divorced, legally separated, or lived separately for the last six months of the calendar year, the custodial parent can claim what is known as a dependency exemption.
However, either parent may qualify for a dependency exemption per child. The parents can agree on who gets the exemption; if they cannot, the court will determine this in a court order.
In the absence of an agreement, the custodial parent is the one with primary custody over the majority of the year.
If there is a written and signed statement by the custodial parent giving them that right, the non-custodial parent can claim the child as their dependent. Claiming the dependency exemption requires the custodial parent to sign IRS Form 8332 and attach it when filing their return.
Child Tax Credits
Child tax credits help families with qualifying children to reduce their taxes. The credits are fully refundable, but only low-income households are eligible for them.
In order to qualify for the full amount of the 2022 Child Tax Credit, you must meet all eligibility requirements and have an annual income below $200,000 ($400,000 if you are married).
Claiming a Child When Parents Are Divorced, Separated, or Live Apart
The IRS has determined that only one person can claim the tax benefits on a dependent child who meets the qualifying child rules.
Parents are not permitted to share or split up the tax benefits for their dependent children on their individual tax returns.
To avoid a situation where both parents claim the child on their tax return, parents should discuss and agree on who will claim the child on their tax return. Both parents claiming their child in their tax returns will slow down the process.
Child Support and Arrear Taxes
Court orders which specify child support are to be obeyed to the letter. To do anything else constitutes contempt of court which can lead to severe consequences.
Where a parent fails to pay child support, the other parent can approach the court for assistance.
Will the IRS Take Your Taxes for Child Support?
If the past due child support owed to the custodial parent is $500 or more for federal tax, while the amount owed to the state is $150 or more, the IRS will allocate your tax money refund to the child support owed.
This is referred to as an offset.
What Happens if the Noncustodial Parent Claims the Child on Taxes?
Only one parent can claim per child per year. The IRS will only accept one tax return and will not accept any other electronic returns that include that child as a dependent.
Attempts to file a second claim by the other parent will be rejected, and you will only be allowed to file once the dependent is removed from the original return.
Ex-spouses may be requested to amend their returns and remove dependents. Upon filing a paper return, the IRS will process the return and determine which parent has the right to claim the child.
Is Alimony Taxable?
Alimony payments or spousal or child support payments received may or may not be taxable and tax-deductible depending on the divorce or legal separation date.
For divorces and legal separations pre-December 31, 2018, all alimony payments received were tax deductible for the payor and recorded as an expense for the payee.
After December 31, 2018, alimony is neither tax deductible nor taxable and should be ignored in tax returns.
How Family Court Direct Can Assist You
Child support matters can be emotionally charged and complex. If you are responding to a request for child support, contact Family Court Direct for an evaluation of your case.
Additionally, we can help you with issues related to child support, divorce, temporary orders, guardianship, paternity, and paternity rights. We can also assist you with changing custody and visitation orders.
Learn more about child support legal aid and how a family law attorney from our firm can help you today.