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Child Support and Tax

The tax implications of spousal support generally get more attention but there are some things to be aware of as regards child support and tax. Below I explain the key ways in which child support and tax relate to each other.

Child Support and Tax Considerations

1. Child support is not taxable income for the recipient nor is it tax-deductible for the payer.

2. This is in contrast to spousal support (alimony) which is taxable income for the recipient and tax-deductible for the payer.

3. Therefore, from a purely financial point of view, a payer of support is financially better off paying a dollar of spousal support than a dollar of child support. The recipient of support is better off receiving child support than spousal support.

4. The guideline child support amount in California, calculated by authorized programs such as the Dissomaster, takes taxes into account and is greatly affected by the after-tax income of the parents.

5. These programs rely on the data entered into them and there are data-entry choices you can make. The main three tax-related choices are: …… Continue Reading

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