When you’re responsible for paying child support, you might wonder if you can claim the payments as a deduction on your tax return. Although you can’t claim the payments as a deduction on your tax return, that doesn’t mean that child support payments — or failing to make them — can’t impact on your taxes. To file your taxes correctly, here’s what you need to know about child support and taxes.
Is Child Support Considered Income?
In short: No, child support is not considered income. The Internal Revenue Service deems child support payments exempt from income taxes, so you don’t include those payments on your tax return. Additionally, when you pay child support to your ex-spouse, you can’t deduct those payments on your income taxes — no matter the amount.
Child Support and Claiming Dependents
Though child support payments don’t affect your taxable income, they can impact your tax bill by affecting which parent can claim the dependent children. You might be able to claim a child as your dependent if you meet certain requirements.
The significance of claiming dependents is that you are allowed one exemption for each dependent, which potentially lowers your tax liability. In addition, if you paid more than half the household costs where your child lives, you might qualify for the advantageous tax filing status of “head of household.”
Generally, the parent with whom the child lived for the majority of the year — referred to as the custodial parent — is allowed to claim the child as a dependent on that parent’s income tax return for that year. However, the noncustodial parent might be able to claim an exemption for a child if he meets certain stringent IRS conditions.
To avoid complications and future arguments, you should include terms in your divorce decree regarding which parent can claim the dependency exemption for a child each year, especially when neither parent is the sole custodial parent. For parents who don’t have an agreement and their child lived with each of them an equal amount of time during the year, the IRS tiebreaker rules allow the parent with the higher adjusted gross income to claim the child.
Tax Refund Offsets
Failing to pay required child support can cause you to lose your tax refund. Under the Treasury Offset Program, the Bureau of Fiscal Services can withhold all or a portion of your refund to pay past-due child support. When this happens, you will receive a notice from the BFS stating the original refund amount, the amount withheld, the agency receiving the withheld amount and how to contact the agency.
Additionally, married people who file a joint return and fail to receive a tax refund due to their spouse’s unpaid child support obligations can file Form 8379 to request a portion of the refund back from the IRS.
Is Alimony Tax-Deductible?
Unlike child support, you can deduct spousal support payments that you make to your ex-spouse based on your divorce decree. The payments should be reported as alimony on Line 31a of your Form 1040. The Social Security number of your former spouse who is receiving the payments must be included on the return, or the deduction might be canceled in addition to a possible $50 penalty.
When you receive alimony payments, however, you must include those amounts as part of your taxable income. Essentially, the income is shifted from the paying spouse to the recipient spouse.
Calculating your income taxes each year can be complicated, especially for divorced parents who have one or more children. It’s best to get advice from a tax expert to achieve the best financial outcome for your family.
Valerie Rind contributed to the reporting for this article.