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Tax implications of child support payments

Child support is something that parents who aren't together any longer might have to deal with. The payments are meant to help financially support the child's needs. But, were you aware the child support payments can also impact your taxes each year?

One way that child support can affect your income tax return is the determination of the filing status. For example, if you want to file head of household, you must ensure that you are the person who paid for more than half of the home's support for the year. If you and another person paid equal shares, neither person could claim head of household status.

On your tax return, you won't have to pay taxes on child support that you received. If you were the paying parent, you can't deduct those payments when you do your taxes. If you are the recipient parent and filing for the Earned Income Credit, you wouldn't count child support as income.

It is also important to know that who can claim the child for tax purposes is another consideration that some parents have to deal with. Generally, the custodial parent is the parent who would claim the child on taxes. It is possible, however, that the noncustodial parent who pays more than half of the total support for the child might be able to get the custodial parent to agree to let the noncustodial parent claim the child on income taxes.

It is important that you and your ex know what is going on when you file income taxes that involve the child. Some child custody agreements will include this information, but other people will have to figure things out on their own. Make sure that the choices you make are the legal thing to do so you can avoid issues in the future.

Source: FindLaw, "Child Support and Taxes Q&A," accessed Aug. 18, 2016

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