Are You a Legal Professional?

Child Support and Finances

Once a child support order or agreement is in place, the payment amount may be increased or decreased under certain circumstances. If a parent's earning ability or a child's financial needs have changed - that could conceivably be enough to trigger a modification. The following resources provide child support modification tips, reasons to modify a child support order and related information. Child Support Modification Tips - Advice for how to obtain a modification of a child support order, such as acting quickly when your income changes. Modification of Child Support Orders FAQ - Answers to frequently asked questions pertaining to child support modifications.

Bankruptcy and Child Support Arrearages

Simply put, filing for bankruptcy does not discharge unpaid child support payments, so your co-parent’s obligations on back child support will remain in place.

If a paying parent’s financial situation has changed since a child support order was first issued, that parent may file a motion to modify the order if he or she is having trouble making payments. Even if a judge grants the motion and lowers future child support payments, the parent is still responsible for the full amount of back child support.

Is Child Support Tax-Deductible?

No, it is not tax-deductible. The Internal Revenue Service (IRS) taxes you on income that you use to support your family and child support payments are no different. A custodial parent who receives child support does not have to claim the money as income.

Does Child Support Affect the Child Tax Credit?

If a child’s parents’ are not married, only the parent using the dependency tax exemption can claim the Child Tax Credit. The parent with primary custody (usually the parent who receives child support) may use Form 8332 to release the exemption to the other parent. In that circumstance, the parent paying child support would qualify for the dependency exemption and therefore the Child Tax Credit.

IRS Form 8332 and the Child Tax Credit

Certain individuals may claim a tax credit for their dependent children. Only the parent using the dependency tax exemption can claim the Child Tax Credit. A custodial parent may use Form 8332 to release the exemption to the noncustodial parent. In that circumstance, the noncustodial parent would qualify for the dependency exemption and therefore the Child Tax Credit. For an explanation of who qualifies for the Child Tax Credit and how to calculate it, refer to the Instructions for Form 1040 or the Instructions for Form 1040A index for Child Tax Credit.

Unpaid Medical Expenses

Failing to pay for unpaid or unreimbursed medical expenses may result in the same enforcement options as regular unpaid child support, also known as "arrearages". Unpaid child support, including medical expenses can be collected through, wage garnishment, interception of tax refunds, license revocation, and/or contempt of court charges.

A Family Law Lawyer Can Help

Whenever finances and child support mix, it is usually a complicated situation. If there is a large sum of money involved, you are almost certainly better off speaking with a professional. For help understanding how child support affects your finances and support order, you may consider contacting an experienced child support attorney.

Learn About Child Support and Finances