For parents who pay child support to their exes every month—or maybe even with every paycheck—they may wonder whether those payments are tax-deductible. Unfortunately for those parents, the answer from the Internal Revenue Service (IRS) is "No."
Supporting your children, whether they live with you or whether you pay child support, is considered a personal expense. It's not tax-deductible. However, noncustodial parenthood can come with one or two other possible tax breaks.
Here's what you need to know about how supporting children can affect your taxes.
Why Isn't Child Support Deductible?
If you take your child to the mall to buy a new pair of shoes, that isn't tax-deductible. The IRS regards child support payments the same way. The money will effectively be used to buy shoes (or something similar) regardless of whether you take your child to the mall or your ex does.
Whether the payments go toward housing, clothing, and other personal support needs of your child, it's all nondeductible.
Does Your Ex Have to Claim the Money as Income?
Your ex doesn't have to claim child support as income. Your child doesn't have to claim it as income, any more than they would have to report their allowance to the IRS.
The IRS states unequivocally that child support payments are never deductible for the payer and never taxed for the payee. Custodial parents should not include child support payments received in their gross incomes for tax purposes. This is the case even if they claim a child as a dependent.
Child support is considered a tax-neutral event.
Interpreting Tax Law
Internal Revenue Code (IRC) Section 61(a) says that gross income covers all income from any source derived except "as otherwise provided." The IRS clarified in a 2016 statement that the "as otherwise provided" applies specifically to payments related to "the support of children."
How Alimony Payments Affect Taxes
The IRC makes a firm distinction between child support and alimony. That's because alimony and spousal support—unlike child support—used to be tax-deductible. The person paying alimony was able to deduct these payments, and the person receiving the payments had to include it in their gross income for tax purposes.
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 January 1, 2019 and onward. Unlike many aspects of personal taxes affected by the TCJA, this provision doesn't snap back at the end of 2025—it's permanently gone unless a future Congress decides to pass further tax reforms to address it.
Alimony on Your 2018 Tax Return
Alimony was still deductible in the 2018 tax year—the return you would have prepared in 2019. If you forgot to deduct alimony payments that year, then you can file an amended return to fix that (as long as you do so within the statute of limitations). However, it's a bad idea to try to reclassify child support payments as alimony to claim a deduction. The tax code has a recapture rule in place that includes certain signals that raise red flags for the IRS. If you go back and try to reclassify payments, you may end up triggering those red flags.
You may 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 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 you 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 were to exceed the amount of the standard deduction you're entitled to claim in that tax year—and the TCJA nearly doubled the standard deduction. Furthermore, you can only claim a deduction for medical expenses in excess of 7.5% of your adjusted gross income (AGI).
The individual standard deduction for the 2020 tax year (the taxes you'll file in 2021) is $12,400, and that increases to $12,550 in the 2021 tax year. That means the total of all your itemized deductions would have to exceed this amount to make itemizing worth your while. Otherwise, you'd pay more income taxes than you have to.
The Child Tax Credit
The Child Tax Credit is also still alive and well. It's worth up to $3,600 per qualifying child in tax year 2021 for those earning up to $150,000 and under provisions of the American Rescue Plan signed into law on March 11, 2021, it is fully 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
While you can't use your child support payments to offset taxes, your tax refunds can get caught up in any unpaid child support obligations. The Treasury Department will intercept federal tax refunds from people who are behind on their child support payments, sending the money instead to custodial parents who were entitled to receive that support.
This rule also applies to the Economic Impact Payments that U.S. taxpayers received in 2020. These payments can be offset by delinquent child support payments. The money would go to the paying parent's state child support agency instead.
The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to them. For current tax or legal advice, please consult with an accountant or an attorney.