Child Support and Taxes Q&A
Child support is a volatile subject -- but when you toss in tax implications, the mixture becomes quite complicated. In complex situations, you are almost always going to need the help of an experienced divorce lawyer. A cornerstone of state child support guidelines is that the support is "income driven." That means it is determined primarily by the income of the parties. It is therefore vital that parents understand what funds can be considered "income" under the child support guidelines.
Q: My ex-spouse is delinquent in paying child support. The attorney general has filed some sort of paperwork with the IRS to withhold my ex-spouse's tax refund. How would I receive the withheld refund?
A: The answer is different for each state. You need to contact the state link to the U.S. Department of Health and Human Services Administration for Children & Families Office of Child Support Enforcement where you live to get this information.
Q: Is there any way to find out if I need to file an injured spouse claim before I file a return?
A: Your spouse can ask the agency that might be claiming the refund for a past-due debt. Another source of information is the Financial Management Service Help Desk at (800) 304-3107.
Q: Can I file my return electronically even though I am filing a Form 8379, Injured Spouse Claim and Allocation?
A: Yes, you can file electronically.
Q: If two single people (never married) have a child and live together, providing equal support for that child, can they both claim head of household status?
A: Only the person who paid more than half the cost of keeping up a home for the year would qualify for the head of household filing status. If both people paid exactly the same amount, neither would qualify for the head of household filing status. Please refer to Publication 501, Exemptions, Standard Deduction, and Filing Information, for more information.
Q: My husband and I have provided a home for my niece and her son for the past seven months. She receives no child support from her ex-spouse, and she does not work or have any income of her own. Can I claim her and her son as dependents?
A: Your niece doesn't need to live with you for the entire year in order to be claimed as a dependent. She meets the first of five dependency exemption tests, which is the relationship test. She must still meet the other four dependency exemption tests:
- Citizenship test.
- Joint return test.
- Gross income test.
- Support test.
Refer to Publication 501, Exemptions, Standard Deduction and Filing Information, for more information.
Q: If you pay child support, are you allowed to deduct anything on your taxes or claim the child as an exemption?
A: Nothing can be deducted for the child support payments. Child support payments are neither deductible by the payer nor taxable income to the payee. You may be able to claim the child as a dependent. Generally, the custodial parent generally is treated as the parent who provided more than half of the child's support. This parent is usually allowed to claim the exemption for the child if the other exemption tests are met. However, the noncustodial parent may be treated as the parent who provided more than half of the child's support if the custodial parent signs a Form 8332 (PDF), Release of Claim to Exemption for Child of Divorced of Separated Parents, or a substantially similar statement.
Q: Are child support payments considered taxable income?
A: No, child support payments are not considered taxable income, according to the IRS. Child support payments are neither deductible by the payer nor taxable to the payee. So when you calculate your gross income to see if you are required to file a tax return, do not include child support payments received.
Q: Is child support considered income when calculating the Earned Income Credit?
A: No, for purposes of calculating the Earned Income Credit, child support is not considered earned income.