Know how child custody and taxes intersect

Child support is a factor in many child custody cases. When you are going through a child custody case, you might not automatically think about all of the ways that the child support order could affect your life. Your income taxes is one of the aspects that you might not be aware that child support can affect.

When it comes to filing income taxes, child support is not considered income for the recipient parent. This means that a parent who receives child support but doesn’t have an income wouldn’t have to file an income tax return. For the paying parent, child support payments can’t be deducted on income tax filing forms.

Another area that is affected is the Child Tax Credit on the income tax return form. Generally, the custodial parent is the one who would claim the child for the purpose of this tax credit. It is possible for the custodial parent to release the child for the noncustodial parent to claim for the Child Tax Credit.

That same release isn’t usually possible for the Earned Income Credit because a noncustodial parent doesn’t likely live with the child in a manner that meets the residency requirements for the EIC. That means that the custodial parent can’t simply waive the right to file for the EIC so that the noncustodial parent can claim the child on the EIC portion of the tax return.

There are other ways that income taxes might be affected by child support orders. Any parent, whether the paying parent or the recipient parent, should make sure that he or she understands exactly how the child support orders might affect income taxes and other financial aspects of life.

Source: FindLaw, “Child Support and Taxes: Non-Custodial Parent FAQs,” accessed July 07, 2016