Berman & Asbel, LLP

Child support and federal income taxes

As tax season approaches, Pennsylvania parents who are divorced may have questions about child support and reporting obligations. Whereas spousal support has some clear tax reporting obligations, child support does not typically impact one's federal tax return. The parent who owes child support cannot use it as a deduction, and the receiving parent is not obligated to report such funds as income.

Tax matters can become more complicated as the issue of taking a deduction for a child are considered. Because listing a child as a dependent can result in a lower taxable income, both parents might want to claim their child. However, only one parent is authorized to do so in a given tax year. The deduction cannot be split, nor can any potential child tax credits be split. A custodial parent is typically entitled to claim the child tax credit regardless of the source of the majority of support for that child. However, this issue can be addressed during the divorce proceedings.

As child support obligations are calculated, a decision to alternate years in proportion to the amount of support provided by each parent might be recommended. Another possibility would simply involve taking turns each year. In a situation involving more than one child, each parent might claim certain children. If a non-custodial parent will be claiming tax exemptions for their children, there will be a need for certain forms to be signed by both parties and included with the claiming party's return.

The ideal time to consider the tax implications of divorce may be prior to filing. It may be helpful to meet with both an attorney and a financial adviser to obtain a clear view of what is entailed in preparing for the end of a marriage.

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