Supporting your children, whether they live with you or whether you pay child support, is considered a personal expense. It’s not tax deductible. But noncustodial parenthood can come with one or two other possible tax breaks. Here’s what you need to know about how supporting children can affect your taxes.
Why Isn’t Child Support Tax Deductible?
If you take your child to the mall to buy a new pair of shoes, that isn’t tax deductible. The IRS regards child support payments the same way. The money will effectively be used to buy shoes (or something similar) regardless of whether you take your child to the mall or your ex does so.
Does Your Ex Have To Claim the Money as Income?
Your ex doesn’t have to claim child support as income, either. Your child doesn’t have to claim it as income, any more than they would have to report their allowance to the IRS. The IRS states unequivocally that child support payments are never deductible for the payer and never taxed for the payee. Custodial parents should not include child support payments received in their gross incomes for tax purposes, even if they claim a child as a dependent.
Applying Tax Law
Internal Revenue Code (IRC) Section 61(a) says that gross income covers all income from any source except “as otherwise provided.” The IRS clarified in a 2016 statement that the “as otherwise provided” applies specifically to payments related to “the support of children.”
How Alimony Payments Affect Taxes
The IRC makes a firm distinction between child support and alimony because unlike child support, alimony and spousal support used to be tax deductible. The person paying alimony was able to deduct these payments from their taxable income, and the person receiving the payments had to include it in their gross income for tax purposes. The Tax Cuts and Jobs Act (TCJA) eliminated the alimony tax deduction beginning with divorce agreements entered into and divorce decrees issued from January 1, 2019 going forward. Unlike many aspects of personal taxes affected by the TCJA, this provision doesn’t snap back at the end of 2025. It’s permanently gone.
The Medical Expense Deduction
Noncustodial parents aren’t completely left out in the cold with regard to tax deductions. The IRS is willing to provide a tax break when it comes to medical expenses you pay on behalf of your children. You can claim an itemized deduction for your child’s medical expenses even if they don’t live with you, provided that you personally paid an insurance company or healthcare provider, your child lived with you or your ex for at least half the year, they’re related to you, and you and your ex paid for more than half their support during the tax year in question. Unfortunately, you must itemize to claim this deduction, and that means forgoing the standard deduction for your filing status. That wouldn’t make sense unless the total of all your itemized deductions were to exceed the amount of the standard deduction you’re entitled to claim in that tax year. And you can only claim a deduction for medical expenses that exceed 7.5% of your adjusted gross income (AGI).
The Child Tax Credit
The Child Tax Credit is also still alive and well. It’s worth up to $2,000 per qualifying child in tax year 2022 for those earning up to $200,000. Noncustodial parents can claim this credit if they were entitled to claim their child or children as dependents because the custodial parent gave them this right by completing and signing IRS Form 8332. Special qualifying rules apply to the children of divorced, separated, or never-married parents.
Child Support in Arrears
You can’t use your child support payments to offset taxes you owe, but your tax refunds can be seized to catch up any unpaid and past-due child support obligations. The Treasury Department will intercept federal tax refunds from people who are behind on their child support payments, sending the money instead to custodial parents who were entitled to receive that support.
