What sorts of arrangements are reached when it comes to the various financial matters in a divorce can have many different implications. This includes tax implications. Such implications can have significant ramifications financially. Thus, it is important to not forget about potential tax issues when in divorce proceedings and negotiations.
One thing that can come out of a divorce are child support payments. Today, we will discuss how the federal government treats such payments for federal tax purposes.
For divorced parents who receive child support payments, the payments are treated differently tax-wise than most income streams. Most income streams are classified by the federal government as taxable income. However, child support payments are not. So, child support payments a parent receives are generally not subject to federal taxes.
For divorced parents who make child support payments, the payments generally have no special effects when it comes to their federal taxes. There are not deductions available for child support payments.
As this discussion underscores, there are special rules and all kinds of important little details when it comes to the divorce issue of child support. When in child support proceedings, it can be very important for a person to be aware of the various applicable rules and important details, as this can help them have a full picture of what effects different child support arrangements would have on them and their family. Having this full picture can be vital when big child-support-related decisions come before a divorcing person. Divorce attorneys can help parents in child support proceedings have an accurate understanding of their options and situation.
Source: FindLaw, “Child Support and Taxes: Non-Custodial Parent FAQs,” Accessed Feb. 18, 2016