March 22, 2012
Article By: William Dorsey
Contact Us With Your Divorce and Custody Law Questions.
We often get the question, “How does child support affect my taxes?,“ in our Tampa family law office; and, we’re happy to answer it.
2 Main Child Support Tax Issue
There are 2 main support federal income tax issues regarding child support:
- Taxability and deductibility of child support payments
- Claiming the child as a dependent and getting the child tax credit
Child Support Payments: Taxability and Deductibility
Child support payments are neutral to the IRS, meaning that the payer does not receive a deduction and the payee does not need to pay taxes. You do not need to reference any child support payments on your IRS Form 1040.
Distinction Between Child Support and Alimony
For tax matters, it’s very important that your divorce and custody agreements distinguish between child support and alimony. Why?
There can be a huge difference in the amount of federal income taxes you are required to pay.
Child support is not taxable and not tax deductible.
Alimony is taxable and is tax deductible. Alimony is taxable to the recipient and tax deductible to the payer.
Be sure you fully understand the income tax consequences of any child support, marital, or alimony settlement agreement before you sign.
Which Parent Claims Child as a Dependent and Gets Child Tax Credit?
Being able to claim a child (or children) as a dependent can provide significant deductions and child tax credits on your federal income tax return.
- The general rule is that you must provide 50% or more of a child’s support to claim the child on your income tax return.
- Often, a legal agreement is created dictating how the child is to be claimed on tax returns. The IRS allows such an agreement if you follow their rules.
For example, some parents may split the deductions.
- If there is one child, each parent takes the applicable deduction and child tax credit every other year.
- If there is more than one child, the deductions and credits can be split between the parents.
- The IRS Form 8332, signed by the custodial parent, must be attached to the noncustodial parent’s income tax return to allocate the deduction and child tax credit to him or her.
- If legally separated or divorced, both parents cannot claim the same child as a dependent. In other words, the same child cannot be claimed more than once on an income tax return.
Where to Get Help with Child Custody Questions in Florida
Our Jacksonville law and child custody lawyers understand how to help you in both divorce and child custody matters. We are happy to answer your child custody questions such as the one we’ve discussed in this article, “How does child support affect my taxes?”
Contact Us With Your Child Custody Law Questions.