Child support and taxes

Child support is the practice in which the periodic payment is made by an obligator for the financial support and care of children of a relationship or marriage. The right to child support and the responsibility of parents for it is recognized internationally.

The Child support payments are non-taxable. The person making the child support payment cannot deduct the amount from his/her income. The person receiving the amount cannot show it as an income. Child support can be non-taxable when it is designated in such a way during the final divorce decree as child support. There is one important tax concern though this amount is not taxed.

Child tax exemption

For some one to claim as an exemption the IRS says that you must provide more than half of that personís total support in a calendar year. The IRS to resolve the dependency question created a special rule and who will get the exemption. To get tax exemption the parent should be one of the following.

  1. Divorced legally or should legally separate under a decree of divorce
  2. Should be legally separated under a written separation agreement
  3. Should be living apart all the time during the last six months of the calendar year
  4. One or both the parents provide for more than half the childís total support for the year
  5. One or both the parents have custody of the child for more than six months of the year

As per the rules, the parent that has more than a year of the Childs custody is the custodial parent and that parent is termed as the one who has provided ore than half of the childís support. If your ex spouse pays more towards the expenses of the child, but you spend more time with the child and take majority of the child care, then in this case, you will get the child dependency exemption. You are the custodial parent in this case and can claim the child as your dependent.

The non-custodial parent can also claim for the tax exemption. This can be done only if certain criteriaís are met and both the parents willingly agree for it.

  1. Written agreement is signed by the custodial parent that states that he/she will not claim the child as dependent
  2. The final decree of the divorce states that the custodial parent will not claim for the tax exemption for a year and the non custodial parent attaches appropriate documents to his /her tax returns
  3. The final decree of divorce provides for the non custodial parent to claim the child as dependent along with a statement that at least $600 was given in support of the custodial child
  4. The non-custodial person should fill out a form 8332 from IRS. The custodial parent and non-custodial one should both sign the form and then it should be attached to the tax returns of the non custodial parentís tax returns.

Negotiations for the child tax exemptions

The parents are not allowed by the IRS to split the tax exemption. The child is considered as dependent only for one parent for a tax year. You can negotiate with your ex spouse as to who gets the exemption for the year or a long-term basis. This exemption can be claimed on rotational basis every alternate year. It is best to have a signed final decree in this regard. The statement should be included in the final divorce decree. Both the persons should complete all the necessary forms needed by the IRS at the time of filling taxes.