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How will child support affect your taxes?

On Behalf of | Aug 5, 2019 | Child Custody & Support

The new Tax Cuts and Jobs Act (TCJA) has left many Americans wondering about the impact on their taxes. You may have heard how spousal maintenance is no longer allowed as a deduction. As a divorced parent, you are much more concerned about how the new tax law affects those who pay or receive child support. Here is what you need to know.

Child support is not taxed

The good news is if you receive child support payments, this is not considered taxable income. Although child support helps supplement your income, the federal government does not require you to include it as part of your income when you file taxes.

You cannot deduct child support payments

If you pay child support, you are not allowed to deduct these payments from your taxable income. However, you may qualify for other tax breaks for supporting your children.

There are bigger credits for dependent children

The TCJA did change the Child Tax Credit for 2018. According to Smart Asset, the tax credit for dependent children has increased from $1,000 per child to $2,000 per child. However, there are some requirements to qualify. You can only claim this credit if:

  • Children are younger than 17.
  • Children are claimed as dependents your tax return.
  • Children must have a valid Social Security Number.
  • Children need to have lived with you more than half the year.
  • If you are filing as a single person, you must have earned less than $200,000. If you are filing a joint return, you and your partner must have earned less than $400,000.

However, if your income is above these limits, you may qualify for a partial credit. The Child Tax Credit is also refundable up to $1,400, which is a change from previous years. So, if you owe the government no money but qualify for the credit, the IRS will send you up to $1,400 as a refund.

You may qualify for other tax breaks as a single parent. If you have more questions regarding child support, consider reaching out to an experienced family law attorney.