After a divorce in which a minor child is involved, you may be required to pay child support to your former spouse for the child’s care. With payments sent periodically like spousal support payments, many parents wonder whether their child support payments are tax deductible. The short answer is no, child support payments are not tax deductible, but it is important to understand why they differ from alimony payments, which until January 1st of this year, were tax deductible for the paying spouse.
Why Child Support is Not Tax Deductible
Child support payments are considered a “tax neutral” event by the Internal Revenue Service (IRS). As the parent paying child support, you are not allowed to deduct those payments from your federal income taxes, and the receiving parent does not have to claim that income on his or her tax returns, either. This is the case even if a parent can not claim the child as a dependent.
The reason that child support is not tax deductible is best illustrated through an example. Let us say that you had set aside money to pay for your child’s new clothes. Those new clothes are considered a personal expense, and therefore are not tax deductible. If you send the money for new clothes to your former spouse for her to purchase the clothing for your child, it is still a personal expense, regardless of which parent actually makes the purchase. The purpose of child support is to cover the personal expenses of your child and maintain his or her quality of living regardless of which parent he or she is staying with. This means covering the personal expenses of clothing, shoes, housing, schooling, and other needs of your child.
Child Support and Alimony
Until January 1st this year, the IRS specifically made distinctions between alimony and child support payments. Under the old law, alimony was tax deductible for the higher earning spouse and the lesser earning spouse was required to report all income received through alimony payments. The rules made it clear that if a spouse was collecting alimony and child support, the child support payments were not included in gross income and that the payments made or received by either spouse could not be lumped together or confused for the purposes of taxes.
However, beginning this year, spousal support payments are also no longer tax deductible by the higher earning spouse making payments to the lesser earning spouse after a divorce. Under the Tax Cuts and Jobs Act, no type of family support following a divorce is considered tax deductible, making both spousal support and child support tax neutral events. An experienced family law and divorce attorney will be able to go over the tax rules regarding child support and alimony payments to explain whether any changes to the tax code will affect the payments you make or receive going forward.
Talk to a Divorce Attorney Today
To schedule a consultation regarding any questions about family law in California, contact one of the family law attorneys at Kearney | Baker today.