Divorced or Separated parents may be ordered by a court to make payments for a child of the marriage. Even an unwed parent may be instructed to support his or her child. The recipient of child support payments, typically the parent with whom the child resides, is not taxed on these payments. (The parent making the payments cannot deduct them, but paying child support may entitle the parent to other tax write-offs)
BENEFITS:
Child support payments are not taxable to the child, nor to the parent who receives them on behalf of the child. There is no dollar limit to this benefit.
Child support payments are not taxable to the child, nor to the parent who receives them on behalf of the child. There is no dollar limit to this benefit.
CONDITIONS:
Payments for child support should be fixed. If they are set by a decree of divorce or separate maintenance or a separation agreement, they are considered to be fixed.
Payments for child support should be fixed. If they are set by a decree of divorce or separate maintenance or a separation agreement, they are considered to be fixed.
In addition, if payments made to a parent will be reduced or terminated upon contingency related to the child, then those payments are treated as being fixed for child support.
Contigencies for this purpose include:
Contigencies for this purpose include:
1)Reaching the age majority (generally age 18 or 21, depending on the law in your state.
2)Leaving School
3)Marrying
4)Entering Military Service
5)Moving out of the custodial parents home
6)Starting to work and/or attaining a set income level
2)Leaving School
3)Marrying
4)Entering Military Service
5)Moving out of the custodial parents home
6)Starting to work and/or attaining a set income level
PLANNING TIP:
If a parent is required to pay both alimony and child support but makes a single payment that is less than the total amount due, the first dollars are considered tax-free child support.
If a parent is required to pay both alimony and child support but makes a single payment that is less than the total amount due, the first dollars are considered tax-free child support.
Example:
Ed owes his former spouse $1,000 each month to cover alimony of $600 and child support of $400. In March 2014, Ed pays only $500. Of this amount, $400 is treated as child support; $100 is treated as alimony.
Ed owes his former spouse $1,000 each month to cover alimony of $600 and child support of $400. In March 2014, Ed pays only $500. Of this amount, $400 is treated as child support; $100 is treated as alimony.
Pitfalls
1) The parent who makes child support payments cannot deduct them.
2) If you are due a refund of federal income taxes because you overpaid it through with holding or estimated taxes, you won't receive it if you are delinquent on your child support payments. The IRS is authorized is divert your refund to the parent owed the child support payments as long as the state provides notice to you and a procedure you can follow to contest this action.
1) The parent who makes child support payments cannot deduct them.
2) If you are due a refund of federal income taxes because you overpaid it through with holding or estimated taxes, you won't receive it if you are delinquent on your child support payments. The IRS is authorized is divert your refund to the parent owed the child support payments as long as the state provides notice to you and a procedure you can follow to contest this action.
Where to Claim the Exclusion
Child support payments received need not be reported on the return.
Child support payments received need not be reported on the return.
Let our experienced professionals prepare your current and past due tax returns in 2015.
Call us now (800)790-8574 for details.
ADVANCE TAX RELIEF LLC
www.advancetaxrelief.net
www.advancetaxrelief.net
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"My husband lost his job and the IRS was garnishing my wages.
I called advance tax relief for help, my wage garnishment was released and we settled with the IRS for $1,200 on a $48k debt. Our family is very grateful" - Shirley W, Tampa FL.
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