Do I Have to Claim Child Support Income on My Taxes?

Question:

Last year my divorce with my husband became final and he started paying me child support for our two daughters. I’m going back to school, and the child support and alimony make up a lot of the money I get (I also work part-time). This is the first year I’m filing my taxes as a single since we got married. Do I have to claim the child support as income? Will I end up with a high tax bill?

— Joyce S.

Answer:

Joyce, we have some good news and bad news for you. First, you do not have to pay income tax on the child support payments that you receive. Likewise, your ex-husband cannot deduct those child support payments from his taxes. Unfortunately, we can’t give you entirely good news. You mentioned that you also receive alimony. Since your divorce occurred before 2019, your alimony payments are considered income, and they must be reported on your taxes. (Your ex can deduct alimony payments from his taxes.)

If you haven’t been setting aside a little money for taxes, you may get hit with an unpleasant tax bill when you file. Next year, we suggest that you put 15% or more of each alimony payment into a savings account that you can use to cover your taxes. You’ll need to send estimated taxes to the taxing authorities on a quarterly basis.

NOTE: The tax overhaul that President Trump signed at the end of 2017 changes how alimony is taxed. For support orders after 2018, the spouse paying alimony will not get a deduction for that payment, and the spouse receiving the alimony will not have to pay taxes on that income. This new rule only applies to orders signed after December 31st 2018 and is not retroactive.

Speaking of taxes, when you file your taxes, make sure you take as many tax breaks as possible. If you have primary custody of your children, you can claim them as dependents (though this deduction goes away for 2018 and future years), unless you waived that right in your divorce agreement. You may also be able to file as head-of-household status, which will give you even more tax breaks. It may end up making more financial sense for you to simply take the standard deduction, but it doesn’t hurt to try itemizing your taxes to see which option offers you the most savings.

One last note: make sure your ex-husband doesn’t also claim your daughters as dependents. Only one parent can claim the children, and typically the parent with the most custody has that right. Of course, you can always negotiate. If your ex-husband would get a bigger tax break by claiming the girls as dependents, you may be able to negotiate a higher alimony payment or even financial assistance with your school bills.

Got more divorce questions, like what tax filing status to use or what to do if your ex doesn’t pay child support? Send them to us, and we’ll do our best to answer. You can also get a lot of your divorce questions answered by attending your next local Second Saturday Divorce Workshop

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