California parents who either receive or pay child support are often concerned about tax issues. This confusion is understandable since federal tax law differs considerably on the taxability of certain payments made by one former spouse to another after a divorce or separation. While alimony, also known as spousal support or spousal maintenance, is considered taxable income for the person who receives it, this is not true for child support.
Child support payments are not tax-deductible for the parent who pays them. They are also not considered taxable income for the parent who receives these payments. In addition, the custodial parent, in most cases, can claim the child as a dependent on his or her taxes. While this may seem unfair to a parent who is paying a large amount of child support, this is the way the law is structured.
There are, however, some situations in which a parent who pays child support may be able to claim the dependent child credit. This would need to be negotiated in the divorce settlement, or possibly a post-divorce modification. In situations where the parents are willing to be flexible on financial arrangements, it may be possible for the custodial parent to agree to give the tax credit to the parent who makes child support payments.
A parent who is facing the end of a marriage can benefit from speaking with an experienced family law attorney about the tax consequences. The attorney can often make suggestions regarding the negotiation of tax payments and credits as part of an overall divorce settlement agreement that can be presented to the court for its approval.