If you are paying or receiving child support after a divorce or separation, there are regulations set by the IRS that control the deductions and exemptions you are allowed because of the payment or receipt of the child support. In any case of financial obligations and regulations that could come with any child support agreement, it is important to hire an experienced Glendale family law attorney that is familiar with the divorce process and all that comes with it.
Child support payments are not taxable. The parent that is making the payments is not permitted to deduct the payments from income, and the parents receiving the payment is not required to claim it as income. In order for this money to be considered non-deductible, it must be labeled as “child support” in the final divorce decree.
There is, however, one important tax consequence that involves child support payments, and that is the Child Tax Exemption. In order to claim someone as an exemption, the IRS requires that you provide more than half of that person’s total support in one calendar year.
In order to get the Child Tax Exemption, the parent must be:
– Divorced or legally separated under a decree of divorce
– Legally separated under a written separation agreement
– Living apart at all times during the last six months of the calendar year
Other requirements include:
– One or both parents provide more than half of the child’s total support for the year
– One or both parents have custody of the child for more than half of the calendar year
The parent who has custody of the child for the greater part of the calendar year is considered the custodial parent and will be treated as the person who has provided more than half of the child’s support. For example, if your ex-spouse pays more toward child expenses than you do, but you spend more time with the child and are responsible for a majority of child care, the Child Tax Exemption will go to you and you can claim the child as your dependent.
The non-custodial parent has the opportunity to claim the Child Tax Exemption if both parents agree and the following criteria are met:
– A written agreement signed by the custodial parent stating that he/she will not claim the child as a dependent.
– A final decree of divorce that states the custodial parent will not claim the exemption for the tax year and the non-custodial parent attaches the appropriate documentation to his/her tax return.
– A final decree of divorce that provides for the non-custodial parent to claim the child as a dependent along with a statement that at least $600 was in fact given in support to the custodial parent.
The non-custodial parents is required to fill out of form 8332 from the IRS and both parents must sign the form, and then attach it to the non-custodial parent’s tax return.
During and after a divorce, you want to make sure you and your children are legally protected and have access to all deserved financial rights come tax season. For more information regarding your legal financial rights during and after divorce litigation involving child support, contact a Glendale divorce attorney at The Sampair Group today.