child tax credit paper with calculator

During a divorce couples have to sort out the division of property, alimony, selling their family home, and more. For parents who decide to split up, child custody and child support are major issues that need to be addressed. The parent with majority custody, the custodial parent, will likely receive monetary support from the noncustodial parent to help with the expenses associated with raising the child. Child support is not taxable so it cannot be deducted from a noncustodial parent’s taxes. For more information on the tax implications of child support, speak with an experienced Sparta child support attorney.

Is Child Support Taxable?

Child support is not taxable and cannot be deducted from your taxes. This means that a noncustodial parent who sends child support payments cannot subtract the amount from their income and a custodial parent who receives child support payments does not have to add the amount to their income.

Paying parents would benefit from child support being taxable because deductions reduce the amount of taxable income you have and therefore lower the amount of taxes you owe. However, this would work in reverse for a receiving parent. If parents who receive child support payments had to add the amount to their income it would increase the amount of taxable income they have, thus raising the amount of taxes they have to pay.

Child support payments are not alimony and are not intended to be used as income for the custodial parent. The purpose of these payments is for the noncustodial parent to financially contribute a fair amount of money to the raising and development of the child. Because they are not responsible for them for as much time as the custodial parent the child support payments balance the difference. If the custodial parent had to pay taxes on child support it would lessen the amount of resources that the child has access to, defeating the purpose of the system.

Which Parent Can Claim The Child as a Dependent?

Only one parent can claim the child as a dependent on their taxes. This can be a point of contention for some co-parents. Depending on your unique circumstances either the custodial parent or the noncustodial parent can claim the child as a dependent. Generally, the IRS defaults to the decision that the child is the qualifying child of the custodial parent because they spend the most time with the child and typically spend more money on housing, food, clothes, etc.

Parents are also free to create their own arrangements when determining who can claim the child. For example, if the noncustodial parent contributes a truly significant portion of the child’s finances they may wish to claim them as a dependent. Depending on what percent of the child’s resources are being contributed and the financial status of the custodial parent, the custodial parent may agree to let the other parent claim the child on their taxes.

Additionally, they may create their own system, like alternating years or deciding annually after evaluating how much money each parent contributed. Though custodial parents generally have the right to claim the child as a dependent, if a legal agreement is reached between both parties they can decide for themselves.