Why isn't child support deductible?

Answer 1

The short answer: Child support money essentially pays for personal expenses, and personal expenses aren’t tax deductible.

Here’s what the Internal Revenue Service (IRS) says on its website:

Child support payments are neither deductible by the payer nor taxable to the recipient. When you calculate your gross income to see if you're required to file a tax return, don't include child support payments received.

So, the IRS officially sees child support payments as non-income payments. They cannot be claimed by the recipient, but someone has to claim them, so the payer gets that burden.

If you’ve been sending a hefty portion of every paycheck to your ex-partner, that might seem unfair—after all, what benefit are you getting from the payments? Since your ex-partner is using your money, shouldn’t they have to declare it?

How the IRS Sees Child Support

To understand the reasoning behind this portion of the tax law, think of it this way: You give your child $50 to buy some school supplies. That money is not tax deductible, as it’s a normal personal expense. You also can’t deduct the money you spend on your child’s food, clothing, or any of the other standard expenditures that come with parenthood.

When you pay child support, you’re essentially making the same type of payment, in the eyes of the IRS. You’re providing for your child, and in some cases, helping their primary custodian maintain a consistent quality of life.

The IRS sees this as a tax-neutral event, which also means that your ex-partner does not have to declare the child support payments as income. It’s as if you never left that living arrangement—you’re still supporting the household, you’re just not there.

What if you cannot claim your child as a dependent? Bad news: It’s still not a deduction. Per the IRS, the person who pays child support cannot deduct any portion of the child support, period. They must pay taxes on the entire amount.

However, if you’re also paying for your child’s healthcare and/or dental care, you may be able to deduct some of those expenses, thanks to a special rule for divorced or separated parents. You’ll have to claim them as an itemized deduction, which will prevent you from utilizing the standard deduction. You can take advantage of this, provided that all of the following are true:

• The child is in the custody of one or both parents for more than half the year.
• The child receives over half of their support during the year from their parents.
• The child's parents are (1) divorced or legally separated under a decree of divorce or separate maintenance, (2) are separated under a written separation agreement, or (3) live apart at all times during the last six months of the year.

If your child’s exemption is claimed under a multiple support agreement, this doesn’t apply, and you can only deduct expenses that you paid personally (not the part of the bill covered by insurance). Contact a tax professional to discuss your options. By the way, that’s generally a good idea if you’ve got any sort of complex tax issue.

Are alimony payments taxed the same way as child support?

Many parents who pay child support also pay money directly to their spouses due to spousal support or alimony agreements. Is that money deductible for the payer?

Not anymore. Alimony payments and spousal support arrangements are taxable to the payer, provided that they were executed after Dec. 31, 2018. Prior to that point, alimony was deductible by the payer and taxable to the recipient, but changes to tax law negated this. New arrangements (and some arrangements that have been modified since Dec. 31, 2018) put the tax burden on the payer.

That helped to clear up some of the confusion surrounding child support—if you’re paying both child support and alimony, you’ve probably wondered why one was taxable and one wasn’t. After all, they’re coming from the same place (your paycheck) and going to the same place (your ex’s bank account). It doesn’t make much sense that one of those payments is a “neutral event" while the other one isn’t.

The good news is that tax law now agrees with you; the bad news is that the payer has to take care of the taxes. Again, if you’re making or receiving alimony payments, consult a tax professional or a qualified attorney.