Child support payments may significantly impact the finances of divorced and separated parents. Taxes can also create significant amounts of stress for divorced and separated parents. If you pay or receive child support, you should understand how that affects your taxes.
Child support and taxes
Contrary to popular belief, child support payments do not qualify as tax-deductible. The Internal Revenue Service (IRS) explicitly declares that paying parents cannot deduct child support payments from their federal income tax return. Tax deductions enable taxpayers to subtract specific expenses from their taxable income, reducing their overall tax liability. However, child support falls outside tax-deductible expenses as it is considered a personal obligation rather than an allowable deduction.
Medical expenses and taxes
If you pay child support and operate as a non-custodial parent, you may claim itemized deductions for your child’s medical expenses. The following terms apply:
- The child does not need to live with you.
- You must make payments to the insurance or healthcare provider.
- The child must have lived with you for at least six months of the year.
- You must have paid over 50% of the child’s support during the tax year.
- You can only claim medical expenses that exceed 7.5% of the adjusted gross income for the tax year.
Child support as income
The Internal Revenue Service (IRS) does not consider child support payments taxable income for the recipient. Therefore, you do not have to include child support when reporting your federal income tax return.
Alimony vs. child support deductions
Differentiating child support from alimony or spousal support is crucial. Unlike child support, alimony payments made to an ex-spouse qualify as tax-deductible for the paying party and are treated as taxable income for the recipient.
Understanding the tax-related responsibilities and exemptions related to child support empowers divorced or separated individuals to manage their finances effectively. It also allows you to focus on your co-parenting responsibilities.