Is Child Support Tax Deductible?
Paying child support is a tax-neutral event
A good many parents transfer money in the form of child support to their exes every month, or maybe even with every paycheck. It seems reasonable that you should be able to claim a tax break for this somewhere on your tax return, but, unfortunately, the Internal Revenue Service says, "No way."
Supporting your children, either directly because they live with you or via a child support obligation, is considered a personal expense. It's not tax deductible any more than the costs of commuting to work or that latte you buy on the way are. Noncustodial parenthood can come with one or two other possible tax breaks, however.
Why Isn't Child Support Deductible?
You couldn't claim a tax deduction for the cost if you took your son or daughter to the mall for a new pair of shoes. You effectively give that "shoe money" to your ex rather than to the shoe store when you pay child support, so this isn't tax deductible, either.
It doesn't matter who actually receives the money—your ex or a store where you purchased items for your child. It still goes toward paying for the housing, clothing, and other personal support needs of your child, and this makes it nondeductible.
Does Your Ex Have to Claim the Money as Income?
Likewise, your ex doesn't have to claim child support as income. Your child doesn't have to claim it as income, either, any more than they would have to report their allowance to the IRS.
The IRS states unequivocally that child support payments are never deductible and that child support isn't considered income. Custodial parents should not include child support payments received in their gross incomes for tax purposes. This is the case even if you claim your child as a dependent.
Child support is considered a tax-neutral event.
Interpreting Tax Law
Two tax laws function together to determine the tax treatment of child support. On one hand, it's reasonable to expect that child support might be taxable income to the parent receiving it because one IRS rule says, "Gross income means all income from whatever source derived."
But there's an important qualifier. The full rule in Internal Revenue Code (IRC) Section 61(a) says that gross income means all income from whatever source derived except "as otherwise provided," and those three words make a world of difference.
The IRS made it clear in a statement released in July 2016 that the "whatever source" rule does "not apply to that part of any payment which the terms of the divorce or separation instrument fix (in terms of an amount of money or a part of the payment) as a sum which is payable for the support of children of the paying spouse." Thus, the IRS "otherwise provides."
The Old Alimony Law
The IRC is phrased in this way to make a firm distinction between child support and alimony, because alimony and spousal—not child—support were tax deductible at one point in time. This code section made it clear that child support was not included in the gross income of the person receiving alimony or spousal support, and that the two payments could not be lumped together or confused.
A taxpayer could only deduct amounts paid that qualified as alimony. Because child support was not considered alimony, the person paying child support could not deduct child support payments as part of any other tax deduction.
Alimony Under the TCJA
The Tax Cuts and Jobs Act (TCJA) eliminated the alimony tax deduction beginning with divorce agreements entered into and divorce decrees issued from Jan. 1, 2019 and onward—at least until the TCJA potentially expires at the end of 2025.
The IRC originally provided for alimony to be deductible to the spouse paying it, and it was reported as income by the spouse receiving it prior to this, so a distinction was necessary between the two types of payments.
No type of family support is deductible while the TCJA remains in effect. Alimony has also become a tax neutral event.
Alimony on Your 2018 Tax Return
Alimony was still deductible in the 2018 tax year—the return you would have prepared in 2019—so it might be tempting to go back and file an amended return to classify those child support payments you made that year as alimony or spousal maintenance. Don't do it. The IRS anticipates this and is way ahead of you.
The tax code has a recapture rule in place that requires taxpayers to report as income any payments they deducted on previous tax returns if it turns out that the payments they made weren't alimony after all. The rule includes certain signals, such as alimony payments that coincidentally end at the same time your youngest child flies the nest and no longer requires your financial support.
Of course, this is plausible—maybe you were paying alimony so your ex could be a stay-at-home mom, and alimony ended when there was no longer anyone she needed to stay home for. This type of event wouldn't necessarily trigger the alimony recapture rule all by itself, but it might wave a flag at the IRS.
You'd be called upon to produce court documents showing that the payments were indeed alimony, and you'd have to recapture those tax deductions on future tax returns if you can't provide that documentation.
The Medical Expense Deduction Is Still Available
Noncustodial parents aren't completely left out in the cold with regard to tax deductions. The IRS is willing to provide you with a tax break when it comes to medical expenses you pay on behalf of your children.
You can claim an itemized deduction for your children's medical expenses even if they don't live with you, provided that you personally paid them to an insurance company or healthcare provider, they lived with your or your ex for at least half the year, they're related to you, and you and your ex paid for more than half their support during the tax year in question.
Unfortunately, you must itemize to claim this deduction, and that means forgoing the standard deduction for your filing status. This wouldn't make sense unless the total of all your itemized deductions exceeds the amount of the standard deduction you're entitled to claim in that tax year. And you can only claim a deduction for medical expenses in excess of 7.5% of your adjusted gross income (AGI) as of tax year 2019, the return you'll file in 2020.
The standard deduction for the 2019 tax year is $12,200, so the total of all your itemized deductions would have to exceed this amount to make itemizing worth your while. Otherwise, you'd pay tax on more income than you have to.
The Child Tax Credit
The Child Tax Credit is also still alive and well in 2019, and it became healthier under the terms of the TCJA. It's worth $2,000 per qualifying child as of the 2019 tax year, up from $1,000 before the TCJA took effect. And up to $1,400 of that is refundable.
Unlike the Earned Income Tax Credit, noncustodial parents can claim this credit if they were entitled to claim their child or children as dependents because the custodial parent gave them this right by completing and signing IRS Form 8332. Special qualifying rules apply to the children of divorced, separated, or never married parents.
The noncustodial parent must submit Form 8332 with their tax return.
Child Support in Arrears
Child support and taxes do interact in one way. The Treasury Department will intercept federal tax refunds from people who are behind on their child support payments, sending the money instead to the custodial parent who was entitled to receive that support.
Under the Treasury Offset Program, the government will pay out the tax refund money to the parent's state child support agency, and the agency will, in turn, make sure the funds get to the custodial parent. This program is authorized by IRC 26 CFR Section 301.6402-5.
This rule also applies to the Economic Impact Payments that U.S. taxpayers receive in 2020 in response to the coronavirus pandemic. These payments can be offset by delinquent child support payments. The money would go to the paying parent's state child support agency instead.
It's always wise to make sure your divorce decree or child support order is crystal clear in identifying the nature of any payments you're making to your ex, even going forward. It's always possible that the alimony deduction will come back in 2026 if Congress doesn't renew the TCJA at that time.
A qualified attorney will know what to say in your decree or court order, but make sure the documents include the correct qualifying language if you're handling a breakup yourself. You might want to have a lawyer review your documents before filing them with the court.
Otherwise, you could end up losing a legitimate alimony tax deduction for the 2018 tax year or going forward after 2025 if the IRS decides that the decree or order is unclear and that the payments might actually have been child support.
NOTE: Tax laws change periodically, and you should always consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.
IRS. "Topic No. 452 Alimony and Separate Maintenance." Accessed Sept. 2, 2020.
Cornell Law School Legal Information Institute. "26 U.S. Code § 61. Gross Income Defined." Accessed Sept. 2, 2020.
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IRS. "Publication 504 Divorced or Separated Individuals." Page 16. Accessed Sept. 2, 2020.
IRS. "Publication 502 Medical and Dental Expenses." Page 2. Accessed Sept. 2, 2020.
IRS. "IRS Provides Tax Inflation Adjustments for Tax Year 2019." Accessed Sept. 2, 2020.
IRS. "Publication 972 Child Tax Credit and Credit for Other Dependents." Page 3. Accessed Sept. 2, 2020.
IRS. "Get Ready for Taxes: Important Things to Know About Tax Credits." Accessed Sept. 3, 2020.
IRS. "Tax Information for Non-Custodial Parents." Accessed Sept. 2, 2020.
Cornell Law School Legal Information Institute. "26 CFR § 301.6402-5 - Offset of Past-Due Support Against Overpayment." Accessed Sept. 3, 2020.
IRS. "Why the Economic Impact Payment Amount Could Be Different Than Anticipated." Accessed Sept. 2, 2020.