It’s Tax Time
It’s that time of year again, and sadly, it’s not Christmas… it’s tax time. Do you make monthly child support payments, or have them deducted from your paycheck? If so, you may have wondered from time to time if you can write off those same payments. Unfortunately, the IRS says this is not the case. Taxes follow a rigid guideline as far as who and exactly what they can claim. Writing off child support payments is not something the IRS allows.
Tax Neutral Status
The thing about child support payments in particular, are that they are what’s called a tax neutral event. The person paying them does not receive a deduction. Similarly, the person on the receiving end does not consider it as income. This is primarily because the IRS deems income spent on the child as personal expenses, hence the neutral status. In the same way that you can’t deduct a Nintendo Switch given as a gift, you can’t deduct the child support payment.
Can I Deduct Anything?
The IRS does make some exceptions for deductions to be made, but not just anything. Who the custodial parent is and the circumstances outlined in the custodial agreement will determine if there are deductions up for grabs. There have been instances where medical bills paid by the noncustodial parent can be deducted. Also, the parents can direct the agreement so that the noncustodial parent takes the Child Tax Credit. Bear in mind, these actions will need to be defined and outlined in the custodial agreement before anyone deducts anything.
Ready For A Modification?
If you are looking to better understand your options and would like to reexamine your situation, our team can help you. There are situations where we can seek to lower your payment or make certain modifications to your current agreement. Reach out to us on our website, DM or call us at 888-981-7509.