Child Support and Taxes: Essential Information Prior to Filing 

Understanding the tax implications of child support is crucial for both payors and recipients. Knowing how child support payments impact your taxes can aid in better financial planning and help avoid surprises during tax season. Here are key points about child support and taxes that you should consider before filing your tax return. 

Child Support is Not Taxable

Unlike alimony, child support payments are not taxable. This means: 

• For the recipient: Child support is not considered taxable income. There is no need to report these payments on your tax return. 

• For the payer: Child support payments cannot be deducted from your taxable income. Thus, these payments do not reduce your tax liability. 

Importance of Documentation

Maintaining accurate records of child support payments is essential, especially if disputes arise or if the IRS requires verification. Key documentation should include: 

• Dates and amounts of payments made. 

• Check numbers or copies of money transfer receipts. 

• Correspondence related to child support. These records can be critical in resolving any tax-related issues or legal disputes regarding child support payments. 

Effects on Dependency Exemptions

While child support payments themselves are not deductible, claiming a child as a dependent can significantly affect your taxes. Generally, the custodial parent has the right to claim the child as a dependent. However: 

• If the non-custodial parent provides more than 50% of the child’s financial support, they might claim the child as a dependent if the custodial parent agrees to relinquish this right. This agreement must be documented on IRS Form 8332. 

Tax Credits

Several tax credits may be available depending on who claims the child as a dependent: 

• Child Tax Credit: For 2020, this credit can be up to $2,000 per qualifying child. 

• Child and Dependent Care Credit: Available if you incur child care expenses while working or actively seeking work. 

• Earned Income Tax Credit (EITC): This significant credit varies by income level, number of children, and filing status. 

Legal Consultation is Advisable

Tax laws are complex and frequently change. Consulting with a tax professional or a family law attorney can provide personalized guidance and ensure compliance with all relevant tax laws and regulations. 

Both recipients and payers of child support must understand the specific tax implications involved. By comprehending how these payments affect your taxes and maintaining meticulous records, you can better manage your financial obligations and avoid potential legal complications.

For expert advice on navigating the complexities of child support and tax law, consider consulting with Gravis Law. Our experienced attorneys are ready to provide the necessary guidance to help you make informed decisions.