Are Child Support Payments Tax Deductible?
As the tax season approaches, many parents involved in the middle of divorce, legal separation or child support proceedings want to know if child support is tax-deductible. Basically, no. There is no tax advantage to paying child support. Of course, there are serious consequences for not paying child support on time every month. A California family court judge can order additional penalties if you fail to make ordered child support payments.
What Tax Credits are Available to the Child Support Payor?
The parent who has primary custody of the child can claim exemptions when they file their federal taxes. Parents can negotiate this tax credit to be split in any percentage, but typically the custodial parent has the right to child credits. The custodial parent is defined as the parent whom the child resides more throughout the year. A Sacramento family law attorney can help you better understand how child support and tax exemptions work.
A parent paying child support should not take a tax credit unless it has been agreed upon and ordered by the court. According to the IRS guidelines, the noncustodial parent may claim the child as a dependent if the special rule for a child of divorced or separated parents applies.
Claiming the credit requires, in part, that the custodial parent sign a Form 8332, Release or Revocation of Release of Claim to Exemption for Child by Custodial Parent or a substantially similar statement. The noncustodial parent must attach a copy of the release to his or her return to claim the child as a dependent.
Does the New Alimony Law Affect Child Support Tax Deductions?
On January 1st, alimony will no longer be tax-deductible for the paying spouse and the recipient spouse will no longer be taxed on it. Some parents may be wondering if they can pay more child support to offset the changes in some way. The short answer is no. The reason is that child support is never deductible, so there is no way for a spouse to up their child support payments in hope of a tax advantage that doesn’t exist.
Child support payments are not tax-deductible. Additionally, it is not counted as taxable income by the receiving party. Since child support is never deductible, there is no way for a spouse to up their child support payments in hope of a tax advantage that does not exist. Speak with a California child support attorney about other tax credit options that may be available in your case.
*Disclaimer – this article is for informational purposes only and does not contain legal advice. For legal advice pertaining to federal and California tax law, consult with a California tax attorney. For accounting advice consult with an experienced CPA or tax preparer.