Is Child Support Taxable
Your child support is not a taxable or deductible expense. As tax season comes along, many separated and divorced parents question which of their child’s expenses can be deducted from their gross income. Neither the custodial or non-custodial parent should include child support payments on their taxes.
Generally, the custodial parent (primary caregiver) is whoever the child lives with the most. Even if you’re still heavily involved in your child’s life, living with your child less frequently means you’re the non-custodial parent (secondary caregiver). Whether you’re the custodial or non-custodial parent, you should understand what child support is taxable and deductible.
This blog will help parents understand how taxes are affected by child support, alimony, and other claims. Whether you’re the primary caregiver or the parent paying child support, you should understand how child support is claimed on your taxes.
Also Read: 7 Tips For Handling A Difficult Divorce
How Child Support Affects Your Taxes
Neither the receiving or paying parent can claim child support as a deductible expense. Later in the article, we’ll go over expenses you can claim from your child, even if you’re not the primary caregiver. If you’re paying child support, don’t deduct any of your payments.
In turn, the parent receiving child support payments cannot include the child support as earned income. Any child support payments should not be claimed or taxed.
Think of child support payments as your child’s money, not yours or your ex’s. If you were still together with your ex, there would be money set aside for your child and their needs. The money spent on your child wouldn’t be considered income if you were still together.
If your ex wrongfully claims child support payments, speak with them candidly about their discretions and repercussions with the IRS. If they continue to misuse the payments, or plan to deduct child support, contact your lawyer.
Your child can be claimed as a dependent on your taxes, even if you’re the secondary caregiver. There are no tax breaks for the support, itself, but you can receive other benefits.
Missing Child Support Payments
If you have missed child support payments, the court will use your state and federal tax refund to cover them. Many parents have issues making support payments and tax time is the best time to modify your order with the court. Get in contact with your lawyer if you’re having issues making payments so you won’t be held in contempt of court.
Just like your taxes, failing to pay your child support can have serious repercussions, including:
- Wage and account garnishment
- Suspended driver’s license
- Suspending other professional licenses and passports
- Jail time
Stay on top of both your child support obligations and your taxes. If you need your taxes adjusted to reflect your true income, contact MyCaseHelper to find a lawyer near you. Your child support payments could change by adjusting your income or drawing a new order.
How Divorce Affects Your Taxes
As of 2017, how alimony is claimed on taxes has changed. When your divorced was finalized is a large factor in how your taxes are affected.
If your divorce is finalized before December 2018, alimony is deductible to the payer and taxable to the recipient. This means you should include alimony on your gross income. In order to be deductible income, you’ll need to meet the following requirements:
- Payments are by cash, check, or money order.
- You don’t live with your ex.
- Payments are not for child support.
- You don’t count payments made after your ex dies or remarries.
If your divorce is finalized after 2019, alimony is not deductible or taxable. You still need to report alimony on your taxes. You will also need to give your ex your SSN so they can report the payments. There is a $50 fine if you fail to give your ex your SSN.
What Support Payments You Can Claim
You cannot claim more than $3,000 for your child. If you have multiple children, you cannot claim more than $6,000. The expenses have to be in regard to your child’s “well-being and protection,” according to the IRS. Benefits that you exclude or deduct from your income must be subtracted from either of these limits.
Non-custodial or secondary caregivers cannot receive the dependent child credit even if you claim your child as a dependent. You must also have a qualifying child to receive this benefit. To qualify as the custodial parent who can claim this benefit, your child must live with you for more than half the year.
If your child spends an equal amount with both parents, then the custodial parent is whoever has the higher adjusted gross income.
How To Find Tax Help
If you’re having troubles paying child support, alimony, or both, call a lawyer. Your lawyer can help readjust your court order to make your payments more manageable.
Alternatively, you may have discovered you filed incorrectly, or your ex is making false claims. If you need help readjusting your or your ex’s taxes, call MyCaseHelper to get advice. You may be able to get a better return or adjust your payments by working with a lawyer today.