How Child Support Impacts Taxes
Child support is tax-neutral, therefore, if you're currently paying child support, it can't be deducted. On the other hand, if you're currently receiving child support, it's not considered taxable income.
Filing your taxes after a divorce will be a little different due to a few extra things that need to be taken into consideration.
Exemptions for Dependents
Exemptions of child support for dependents (and if you're able to claim a dependent at all) are based on how much time the child spends with both the custodial and noncustodial parent within the tax year. Most children living at home are considered dependents, as long as they meet a few basic requirements, such as:
- Your child is considered a dependent if he/she was under 19 at the end of the taxable year
- If your child was under 24 and a full-time student
- If your child is disabled
- Your child lived with you for at least 51% of the tax year
- If your child did not contribute to their own support
As the custodial parent, you may, in some cases, agree to allow the noncustodial parent to make the dependent exemptions for one, or all of the children. The noncustodial parent may take the exemption if:
- you are both legally divorced or legally separated, or lived apart for the latter six months of the tax year
- your child lived with either both you or the noncustodial parent for a minimum of the last six months of the year
- more than half of your child's support was paid during the year by you and your spouse
- the separation agreement or divorce order states that you may have the exemption, or your spouse signs a legal declaration forfeiting the exemption(s)
Head of Household Status
Just like married or single, head of household is a filing status that may be claimed if you have custody and the child is physically present under your care for more than half of the year. You will receive a lower standard deduction rate, and your tax rate will also be lower than if you file separately as married, or single. You may claim head of household under the following circumstances:
- If you had a child or other qualifying individual living with you for more than six months out of the tax year
- If you have contributed to the majority of your household and/or living expenses during the taxable year
- If you are not married or legally defined as “considered unmarried”
An experienced family law attorney can consult you on the appropriate filing status, and further define what legally constitutes “considered unmarried”.
There are several available tax credits for parents aside from dependent exemptions. There are some very basic guidelines which explain the criteria and standards to meet in order to qualify for these credits. For example, you may qualify for the earned income credit if you're a parent who has earned income below the accepted standard for your number of qualified dependents.
The child tax credit applies to the parent of a child who is under 17 years of age, who lived with you for over half of the year and did not contribute more than half of the expenses related to their own support.
References: Available Tax Credits for Parents