Family Law

How Child Support Affects Your Taxes and Other Financial Matters

Child support is one of the most complicated areas of family law because every state calculates it in a different way. Only federal law is consistent, and this deals mostly with taxes. For other issues involving child support, taxes, and related financial matters, you might need to consult a family law attorney in your state to help you understand your rights and responsibilities.

Child Support Calculations

When a parent receives any sort of benefit payment, most states consider this money as income when the court calculates child support payments. Benefits can include disability payments, unemployment income, and worker's compensation.

Some States Include Overtime in Calculations

Income earned from overtime or a second job is an area of child support law that varies a great deal from state to state. In a few states, non-custodial parents are free to take on additional work without their child support order increasing because of the extra earnings. By the same token, a custodial parent working an extra job would not decrease child support payments. But many states include overtime and second-job earnings as regular income when calculating support.

Some courts will consider the circumstances surrounding a parent's overtime or second job. If the parent has always worked extra hours, the judge will probably count it as regular income. If the second job or overtime is seasonal or only occasional, courts may not factor it in.

Health Insurance Coverage for Children

Some states include health insurance coverage for children in their child support calculations, while others add insurance costs on top of a basic child support order. A parent who receives health insurance as a benefit of employment is usually required to include the children on the plan.

Child Support Is Not Tax-Deductible

If you pay child support, it is not tax-deductible. The Internal Revenue Service taxes you on income that you use to support your family and child support payments are no different. A custodial parent who receives child support does not have to claim the money as income.

Only One Parent Can Claim the Children As Dependents

Parents can split their children as dependents on their tax returns if they have more than one child and each parent claims one child but not the other. A child's Social Security number can only appear on one tax return as a dependent, or the IRS will usually reject both returns until the issue is sorted out.

The IRS gives the dependent deduction for a child to the parent with whom the child lived for over half of the tax year. The parent who claims the child as a dependent also has the right to claim certain tax credits, such as the earned income credit and child tax credit.

A Family Law Lawyer Can Help

The law surrounding child support and benefits, taxes and other financial issues is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a family law lawyer.

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