What Are The Tax Implications Of Child Support?
If you have children and get a divorce, you’re usually going to have to enter into some kind of child support agreement. Some parents wonder if there are tax implications to worry about. Are these payments income? Can they be expensed? How does it all work? Our Morristown child support attorneys won’t just help you fight for a fair child support agreement. They’ll also answer questions like these.
Do I Have to Pay Tax on the Child Support I Receive?
If you are the parent being paid child support, you might be worried about ending up with an unexpected tax bill. There’s no need to think about that though. Child support does not count as income for you.
Let’s say that you make $3,000 per month and you receive $1,000 in child support. As far as the tax collectors are concerned, you make $3,000 every month. That $1,000 does not matter to the IRS. This is because child support is meant to pay for the needs of your children. It’s not income. The payments are used to provide for the kids. They are meant to help you purchase things like clothing, books, food, and anything else that a child could possibly want or require to live a happy and healthy life.
Will Paying Child Support Affect My Tax Returns?
Since you don’t have to report child support payments as a payee, where does this leave the person making the child support payments? Some types of expenses can be written off on your taxes, lowering the amount of taxable income and reducing your tax bill overall. That’s not how child support works for the paying parent though.
You cannot write off these payments for any reason. If you make $5,000 per month and pay $1,500 in child support, the IRS is still going to treat you like you make $5,000. We do not recommend trying to pull the wool over their eyes.
Can Children Affect My Taxes In Other Ways?
The children of a divorced couple can still affect their taxes. What really makes a big difference is who claims the kids as dependents. Usually the custodial parent will name the child or children their dependent. If both parents have custody time that’s close to equal, one parent could claim some of the children and the other could claim the remaining children. If there’s only one child, then you could potentially take turns claiming them as your dependent.
It’s a good idea to coordinate on this with your former spouse. If you both try to claim the same child in the same year, that can lead to problems.
Contact Our Divorce Lawyers
When you need help negotiating a fair child support agreements, contact Lazor Rantas, PC. We can schedule a consultation and tell you more about how our experienced family lawyers can be of assistance. Reach out to our law firm today.
