Is child support tax deductible?
Child support is not tax deductible for the parent making the payments. Paying for expenses for your child, whether they live with you or not, is not something that can be written off in your taxes in general.
For example, if your child wanted a new outfit for their first day of school, that isn’t an expense that you would then be able to claim on your tax return to the IRS, as it would be deemed a personal expense.
Child support payments work the same way. Whether you are the one to take your child to get their new outfit or your ex is, your child support payment money is effectively used the same way on behalf of your own child and is therefore deemed a personal expense.
Read on for more information, or give me a call/text/email to learn more. -Carl P DeLuca, Divorce Lawyer
Does child support count as income?
Any child support payments that a parent receives from their ex-spouse are not considered taxable income by the IRS. The custodial parent (the one receiving the payments) is not required to claim these payments as part of their annual gross income. Child support payments can also not be claimed as earned income to qualify for the Earned Income Credit.
Think of it this way – taxes are paid on money that is earned. Child support money is not money that is technically earned; It is money received on behalf of your children. Therefore, it is not earned income subject to being taxed. In fact, the money that is used to make those payments has already been taxed because the money likely came from the noncustodial parent’s taxed income.
Who is entitled to the income tax deduction for the children?
According to the IRS, any dependents are only eligible to be claimed by one taxpayer. When a couple is married, this issue is a moot point because the parents can file jointly, which essentially makes them a single entity claiming their children as dependents.
For divorced parents and parents who are unmarried, however, only one parent is able to claim the child. In these instances, it is typically the parent who has primary custody of the child who claims the deduction. If the custody agreement outlines that the time spent with each parent is 50/50, it is usually the parent with the higher gross income that claims the child on their text return.
A parent whose child primarily lives with them or who lived with them for more than half of the tax year, is likely able to file their taxes under a Head of Household status and claim their child as a dependent.
Parents who qualify as Head of Households and are able to claim their children as dependents may also be eligible for a Child and Dependent Care Tax Credit if their income is below the benefit threshold. This may make part of the relevant childcare expenses, like daycare or other after-school care, eligible for additional tax breaks.
Can the noncustodial parent claim the children on their taxes?
There is only one exception to the residency requirement when it comes to a non-custodial parent claiming their child as a dependent – the custodial must agree not to claim the child on their own tax return.
In order for this to be properly processed, the custodial parents must sign a special IRS form, Form 8332, to be submitted with their returns. This is the same form that parents must use if they have joint custody and plan to alternate claiming dependents every other tax year.
Treasury Offset Program and delinquent child support
Past-due child support payments can be collected from the federal tax refunds of parents who owe support under the Tax Offset Program. In order to be eligible for this program, one of the following criteria must be met:
- The parent who retains custody of the child is currently receiving benefits under the Temporary Assistance for Needy Families Program and the noncustodial parent owes at least $150 in child support payments.
- The parent who retains custody is not currently receiving benefits under the Temporary Assistance for Needy Families Program and the noncustodial parent owes at least $500 in child support payments.
A parent who owes child support and meets the criteria above will receive notification from the government that outlines the monies owed and explains the process of how the debt will be collected by the Offset Program and its corresponding agency.
When the Treasury Department processes tax refunds, it identifies those who owe child support payments and then intercepts the amount owed from the tax refund payment of the indebted parent. The money is then forwarded to the state child support agency and on to the custodial payment to pay the past-due support.
If the parent who owes child support monies is ineligible for or does not receive a tax refund, then unfortunately there are no funds that this Offset Program is able to intercept on behalf of the custodial parent.
Contact Us For Answers to Your Child Support Questions!
When parents don’t live with each, the rights and responsibilities regarding child support can be confusing. Contact us to discuss your rights and responsibilities before making a mistake you may have to pay for later. We are happy to help!