Tax season is upon us once again.
Tax day is April 18, and while this may seem far away, it will be here before we know it. Taxes can be incredibly confusing, and when your circumstance is a bit different, it can make them even more confusing! Because tax day is coming fast, many people have been wondering what the connection between child support and taxes is. Luckily, our child support attorney in Hauppauge is here to help!
Are child support payments tax-deductible?
Many people think that child support is tax-deductible for the person responsible for paying it, but it is actually tax-free for both parties. Part of the reason for the confusion is because spousal support is both tax-deductible for the person who makes payments and taxable for the person who receives payments. Child support is neither taxable nor tax-deductible. This is why it’s important to be careful with how the support is characterized in the settlement agreement, as it it could lead to tax consequences.
How is child support qualified?
In order for a payment to be considered as a child support payment, it has to be designated as such. If you pay alimony and child support, and you lump the payments as one “family support” payment, it will not be considered as child support. This can make things difficult come tax time because alimony payments are taxable whereas child support payments are not.
These are just the basics of how child support plays a part in taxes. If you have any questions or concerns, please contact our child support attorney.