Taxation Rules for Child Support

Parents can expect that they will both continue to provide financial support for their children until the age of majority (18 or 19 depending upon the jurisdiction) but there is one area which often causes confusion.

The topic of whether child support payments are considered taxable income by both parties, and whether child support payments may be tax deductible for the person paying them, often come up when filing taxes.

What Does Child Support Cover?

The federal government has established guidelines for determining child support payments. These are based upon the incomes of both parents, the amount of time each parent has physical custody of the children, and on how much money is being spent to raise a child in general.

Typically, one parent will have primary custody while the other parent makes financial contributions for things like clothing, food, education, medical, shelter, and others which are shared expenses of raising a child.

Child support forms the basis for determining what level of contribution towards raising a child is a reasonable parental contribution considering income levels.

What Is Taxable Income?

Taxable income involves all income earned from sources like salary, business income, investment proceeds, and any taxable government payments.

Non-taxable items are things or gifts received from third parties (except for cash), welfare benefits and others where the federal government does not want to increase the amount of income on which tax is paid.

Taxpayers determine their taxable and non-taxable incomes and then use this information when completing their income taxes.

The calculation of taxable income is based on gross income minus allowable deductions.

Is Child Support Part of Taxable Income?

Typically no. Child support payments made by one parent to another will typically be taken into account as part of the calculations made when determining the amount of child custody. It may not be taxable income to either party.

For example, if one is receiving child support payments totaling an amount of $3,500, the stated amount should not be included when tallying gross income for that year.

Is Child Support Tax Deductible?

Per guidelines from the IRS, child support is not tax deductible in the same way that personal expenses are not tax deductible.

If someone is paying child support, they are typically spending their money on necessities which do not have tax benefits associated with them.

The Bottom Line

When filing taxes, it is best to keep track of not only one’s own gross income but also take note of all the money going out the door to cover expenses such as food, shelter and others.

Keep track of these figures so that if necessary there is proof for why things like non-deductible expenses should be included in calculations when determining allowable deductions.

Child support is not taxable for the end receiver, or it is not considered part of gross income.

Child support payments are not tax deductible on the party making the payment because the money is considered going towards necessities and not being spent on personal expenses.

Taxable income involves all income earned from sources like salary, business income, investment proceeds, and any taxable government payments.
No. This is because expenses like childcare or medical for dependents are not tax deductible on personal income tax.
Custody arrangements involve determining which parent takes primary responsibility for a child. Often this may be determined by evaluating how much time each parent spends with their children, who provides them with better opportunities or whether there has been any abuse or neglect that occurred during shared parenting responsibilities.
For tax purposes, parents can claim their children as dependents if they meet the criteria set out in IRS Publication 501 for qualifying children or other dependents. Whether you have physical custody or not does not change the fact that you are providing financial support for your child even if it means paying rent/mortgage at another location where they live full time. So yes, you should still claim your child as a dependent.
Per IRS guidelines, all child support paid is required to be documented. This means that if you are paying alimony in addition to child support, this additional amount should not be included when filing taxes because it is not considered a tax deduction.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.