Income, as well as child custody arrangements, are both considered significant factors when the amount of child support awarded is determined as well as the resultant tax obligations for income tax. Since income, custody and child support are all closely connected, responsibilities for child support can affect the noncustodial parent once it is time to do taxes. This article answers some of the more typical questions that noncustodial parents in New York might have regarding how child support will affect them come tax time.
The IRS does not consider child support as taxable income. This means that the noncustodial parent (payer) cannot deduct the payments and the custodial parent (payee) is not taxed for receiving those payments. As a result, when calculating gross income for a tax return, or to determine if a return must be filed, child support payments that have been received should not be included.
Some individuals may be able to claim a tax credit if they have dependent children. However, only the parent who is using this dependency tax exemption is able to claim what is known as the Child Tax Credit. For individuals who are curious about this exemption, it is recommended to refer to either Form 1040’s instructions or the index of Form 1040A’s instructions in order to learn more about the Child Tax Credit.
These are just a handful of the issues that noncustodial parents might be wondering about when they begin working on their taxes — this is not an exhaustive list. Handling situations involving child support and taxes can get complicated for New York parents. If large sums of a parent’s money are involved, those parents are typically recommended to consult an experienced tax attorney.
Source: Find Law, “Child support and taxes: non-custodial parent FAQs“, Accessed on Jan. 5, 2016
