Tax season is one of the most dreaded times of the year. Accurately completing your taxes can be overwhelming and stressful, especially if your situation has recently changed, such as a divorce. Your new status as a single parent caring for or paying to support a child can make tax time a headache if you don’t understand the rules. For example, can you write off child support when doing your taxes?
You must review how child support payments affect your taxable income in Texas if you want to file correctly and avoid an audit or issues with the Internal Revenue Service. Mistakes and miscalculations can be costly but easily avoided if you understand how child support factors affect your situation.
How Does Child Support Work in Texas?
Child support is money earmarked for the basic needs and costs of raising a happy and healthy child. In Texas, child support is money one parent pays to another to help support the cost of raising that child and providing the child with housing, food, clothing, school supplies, and other essentials.
Child support obligations depend on the custody agreement and the child’s living situation. The custodial parent is the parent with whom the child primarily lives. The non-custodial parent typically has visitation rights. In most situations, the non-custodial parent pays child support to the custodial parent.
Texas calculates child support based on the number of minor children and the parent’s net resources available. Net resources can include employment income, investment income, retirement benefits, VA benefits, Social Security benefits, unemployment, and gig economy work. For one child, the state estimates the “obligor” should pay 20 percent in child support, with incremental increases depending on the number of children they must support.
Can You Write Off Child Support Payments in Woodlands, Texas?
Texas residents do not pay state income tax on their earnings. Since Texas residents do not file state tax returns, child support payments do not impact their state taxes. However, child support can play a role in your federal income taxes.
Federal tax law prohibits the deduction of child support. If you pay child support to the other parent, you cannot deduct these child support payments from your taxable income. The IRS also does not treat child support as taxable income for the parents receiving child support. It is seen as a personal expense and not a deductible expense.
Viewed in another light, if you were still married to your spouse and raising the child together, that is money you would still use to support your child and family. Child support pays for your child’s needs. Those needs exist whether you are married or divorced.
Are There Other Options for Lowering Your Taxable Income?
While child support payments cannot be used as write-offs or deductions, there are other ways to lower your taxable income. If you are a non-custodial parent and paid for medical expenses during the year, those medical payments could be tax deductible.
Another potential tax benefit can be claiming your child as a dependent. Parents with joint custody arrangements often agree to alternate the years they claim children as dependents. That way, each parent can benefit from claiming dependents on their income taxes.
The IRS mandates only one parent can claim a child as a dependent on their taxes. A parent can claim Head of Household tax benefits under specific circumstances. Parents with 50/50 custody who cannot communicate adequately, agree on a mutually beneficial arrangement that lets them alternate years, or do not follow the assigned child tax deductions in the divorce terms may be subject to the agency’s “tiebreaker rules.”
Additionally, parents should understand that when divorced individuals claim a child as dependent on their taxes, it can trigger an audit, and the agency must investigate which parent’s claim takes priority utilizing the tiebreaker rules.
Parents must be aware of another crucial tax implication when filing taxes. If a parent is behind on their court-ordered child support payments, the government can garnish any refunds owed after filing to satisfy the individual’s outstanding child support debt.
A Woodlands, Texas, Attorney Can Guide You Through the Child Support System
At BB Law Group PLLC, we understand the changes in your family situation can make tax time even more frustrating. Our compassionate team of Woodlands child support attorneys wants to help you find legal solutions to your child custody and support situation and guide you through how your situation may impact you during tax time.
Contact our office today at (832) 534-2589 or through our online form to discuss your unique situation and how we can help you understand your rights.
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