Do You Have to Claim Child Support on Taxes?
Following a divorce involving minor children, the non-custodial parent often must pay child support. Although child support payments are calculated based on the parent’s income, the amount can often be considerable, especially for multiple children.
Whether you pay or receive support, you may wonder how these payments will be accounted for when you file your tax return. The child support attorneys at Mims Ballew Hollingsworth⏐Family Law would like to provide valuable information on how child support may factor into your taxes, our team of legal experts has guided families throughout Southlake, Fort Worth, Denton, and nearby Texas for over a decade.
Child Support and Taxes: Can I Claim a Tax Deduction for Child Support Payments?
Spouses paying child support often wonder: “can I claim a tax deduction for child support payments?” Similarly, spouses receiving child support may wonder: “do I need to include support payments as part of my taxable income?” The answer to both questions is a resounding “no.”
Child support is considered a “tax-neutral” event. Child support is not filed on your tax return because it is not considered taxable income (for the recipient) nor a deduction (for the payor).
The Internal Revenue Service (IRS) has a reason behind this. It is presumed that the non-custodial parent would be paying on behalf of their child if they lived under the same roof. In this case, expenses on behalf of your child would not be tax deductible, so neither is child support.
There are a couple of tax benefits that may be available to a non-custodial parent paying child support:
- IRS Form 8332: the non-custodial parent may be able to claim the child they are paying child support for as a dependent. This is only allowed if the custodial parent has given their consent.
- Child and Dependent Care Credit: you may be eligible for this tax credit if your spouse has not claimed your child as a dependent on their tax return. Only one parent can claim each dependent. Additionally, if you exceed the income limits established by the IRS, you will not qualify for this credit.
Any family law attorney would highly recommend that you consult with a certified public accountant (CPA) or enrolled agent (EA) to receive the most accurate advice related to your situation.
While a CPA is licensed by a state board of accountancy, an EA is federally authorized to represent clients before the IRS. Both tax professionals have the knowledge to help you make well-informed decisions in filing your return.
Unpaid Child Support
If you are behind in your child support payments (in “arrears”), the IRS will withhold some of your federal tax refunds and apply it toward your unpaid balance. This program is known as the Federal Tax Refund Offset Program (FTROP).
The parent paying child support will not receive their federal refund, but instead, the refund amount will be sent to the custodial parent. This program is in place to avoid taking more extreme measures to collect back support.
A Southlake Child Support Attorney Offering Legal Guidance Near You
Paying child support can take a severe toll on your bank account. We understand that even the smallest tax breaks or benefits can help keep you on your feet. Mims Ballew Hollingsworth | Family Law has years of experience advising clients in your situation. Contact us today to schedule a consultation.