Our Austin Texas family law attorney fully briefs clients on the essential elements of divorce law. If you are involved in divorce proceedings and have children, or contemplating filing for divorce, you may be looking for a general understanding of the essential elements of divorce law and related legal principles. This includes understanding the tax implications associated with child support payments.
When it comes to federal income taxes, the parent receiving child support obligations does not have a tax liability. The parent receiving support payments does not pay federal taxes. Similarly, minor child who benefits from the child support payments does not incur a federal tax liability either.
The parent who pays child support does not receive a tax deduction (or tax credit, for that matter) from the federal government.
According Austin Texas Family attorneys, because child support payments themselves are not subject to federal taxation, money transferred from one parent to another can end up being closely scrutinized to ensure that it is in fact child support, and not spousal maintenance. The payment must be explicitly classified as child support in the divorce decree to be legally considered this type of payment for the purposes of federal taxes. Here in Texas, child support is withheld from the paying parent’s pay check by the Attorney General’s office, so there is no confusion as to what is child support and what may be spousal maintenance.
Prior to a divorce, the matter of who claims the child as a dependent is typically not an issue. The matter of which parent claims a child as a deduction for tax purposes becomes complicated once separate residences are established during a divorce or when a divorce is finalized. In such a situation, the Internal Revenue Service presumes that the custodial parent is entitled to the tax deduction for the minor child. However, the Internal Revenue Service provides avenues to allow the noncustodial parent to claim the child as a dependent, including the custodial parent releasing the claim for the year. Our Austin TX family law attorney can assist in ensuring the proper information is presented to the IRS in this type of situation.
There are tax professionals who focus on assisting a our Austin TX family law attorney in optimizing any tax benefits potentially associated with a divorce decree or settlement agreement. This includes the tax consequences associated with child support and any other monetary or property conveyances between divorcing spouses.
If you are in need of assistance from an Austin TX family law attorney, contact Nunis & Associates by calling 512-236-9696 for a consultation.