NC Child Support – Is it Tax Deductible?

money issuesNC child support is not taxable as income to the recipient parent and is not a tax deduction to the payor parent. This applies whetehr it is paid as temporary child support  or is the result of a final hearing on child support.  Similarly, a parent receiving child support does not have to claim it as income.

Generally, you are allowed to claim one exemption for each person you claim as a dependent. The basic rule is for divorced or separated parents is that the parent who has custody of a child for more than half of the tax year is the parent who provides more than half of the child’s support and is thus entitled to the exemption for the child.

There are exceptions: First, if the custodial parent signs a statement or declaration that he or she will not claim the exemption for the child, and the non-custodial parent attaches this declaration form to his or her tax return filing. Second, if the custodial parent signs a decree or agreement that states he or she will not claim the exemption for the child.  Third, there is a court order from a state judge that entitles a parent to claim an exemption.

In some situations, you may also be able to claim a credit for certain kinds of child care expenses.   Generally. in order to qualify, you must pay these expenses so that you can work or look for work. Furthermore,, to be a qualifying person for the child care tax credit, your child must be a dependent for whom you can claim an exemption. If you are divorced or separated there is a possible exception to this rule may apply:  if you are the custodial parent, you can treat your child as a qualifying person even if you are unable to claim the exemption. If, however, you are the non-custodial parent of the child, you cannot treat your child as a qualifying person, regardless of whether you can claim the child’s exemption or not.

These rules are complicated and subject to changes in the law.   Before filing a return or making a decision, talk the issue through with a tax professional and/or consult with the IRS.  

To recap, the IRS puts it this way:

“Question: Are child support payments deductible by the payer or can the payer claim an exemption for the child?

Answer:

Child support payments are not deductible by the payer.

  • Child support payments are neither deductible by the payer nor taxable income to the payee.
  • The payer of child support may be able to claim the child as a dependent.
  • The parent with whom the child lived for the greater part of the year is the custodial parent for income tax purposes.
  • Generally, the child is the qualifying child of the custodial parent, and the custodial parent is allowed an exemption for the child if the other dependency tests are met.
  • The noncustodial parent may claim an exemption for the child if the custodial parent signs a Form 8332 (PDF),Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or a substantially similar statement, and the noncustodial parent attaches it to his or her return.”

For more information about taxes and divorce read this article fore more North Carolina child support information and this one for North Carolina alimony.

 

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Scott Allen is a divorce attorney in Raleigh, NC with over nineteen years of experience in all areas of family law litigation and settlement. He can be reached at 919.863.4183.