What To Know About Child Support And Taxes
Tax time is quickly approaching. In 2022, all individuals must file their federal income tax return by April 18th (due to holiday/weekend). Of course, Texas is in the minority of U.S. jurisdictions that does not have a state income tax. For separated parents, taxes can be especially complicated. You may be wondering: How will child support affect my taxes? The short answer is that it generally doesn’t—though there are some exceptions. Here, our Harris County child support attorney explains the key things parents should understand about child support and taxes.
Child Support: Not Tax Deductible, Not Taxable Income
Child support is paid with after tax income. As explained by the Internal Revenue Service (IRS), “child support payments are neither deductible by the payer nor taxable to the recipient.” In effect, this means that child support is considered to be tax neutral.
The parent who pays child support is responsible for paying the taxes. If they are a W-2 employee, their federal income tax withholding should account for this income. Alternatively, if they are self-employed or have 1099 income, they do not get to claim a deduction for child support.
As a consequence of this, child support is not taxable income for the parent who receives it. If you received child support from your former partner in 2021, you do not have to report that income in your federal tax return. It is already accounted for regarding tax purposes.
A Change in Taxable Income Could Justify a Child Support Modification
One way in which tax season could affect child support is if the paying parent (obligor) experienced a substantial change in their income. A large change in taxable income—in either direction—could justify a child support modification in Texas.
As an example, imagine that you owe child support in Houston. If your income dropped by 50 percent due to a loss of a job, you may be eligible to get your child support payments reduced. On the other hand, a parent may be entitled to get more child support from their former partner if he or she saw a large increase in their income.
Unpaid Child Support: A Tax Refund May Be Intercepted to Cover Back Due Child Support
Unfortunately, delinquent child support remains a serious problem in Texas and throughout the country. Parents who are owed child support payments have a number of different collection options available. You may be able to intercept your ex’s federal tax refund. To learn more about this option, contact an experienced Galveston County child support enforcement attorney.