Child Support Taxes
According to state laws, all divorced parents are financially responsible for their children for specified periods of time. Even if one parent is not involved with the child’s life, they must still support them. The parent that the child lives with is the custodial parent, and the other is the non-custodial parent. In most cases, the non-custodial pays the custodial parent, since the second incurs the child’s cost of living expenses, such as food, clothing, and daycare. The amount of child support is determined via state guidelines, and the non-custodial parent cannot monitor how the custodial parent uses the funds.
Child support can cause a lot of conflict between divorced parents, especially when tax laws complicate matters further. The amount of child support is based on the parents’ incomes but changing tax laws can affect the amounts paid out, received, and taxed from year to year.
In Maryland, the paying parent cannot deduct their child support payments on their tax forms. Parents that receive support payments are not supposed to include them under income when filing. These laws apply to both Maryland and federal income tax forms.
Claiming a Dependent and Child Tax Credit
Only one of the divorced parents may claim the child as a dependent, and it is usually the custodial one. To qualify, the child must be under the age of 17 at the tax year’s end. The child must have also lived with that parent for the final six months of that tax year. In addition, that custodial parent needs to be providing 50 percent or more of the child’s monetary support. It is important to remember that only one parent can make the claim; if both do, complications can ensue.
The Internal Revenue Service (IRS) offers a child tax credit, which can be up to $2,000 for each child under the age of 17. This will be reduced by five percent if the parent’s adjusted gross income exceeds $200,000. This can only be claimed by one parent, in most cases. There are a few exceptions, which can be explained by an experienced child support lawyer.
Deducting Child-Related Expenses
Certain child care costs may qualify for IRS deductions on tax returns if a specified financial threshold is met. These parents may be able to deduct daycare, healthcare, and college tuition costs. Although these deductions are not substantial, they can take a little edge off these expenses.
If one parent is not making their payments, the IRS can step in by redirecting their tax refund. Instead of going to the delinquent parent, it may get sent over to the state’s agency that manages that child support case. It may then end up getting distributed to the custodial parent.
Baltimore Child Support Lawyers at Huesman, Jones & Miles, LLC Help Divorced Parents with Child Support Tax Issues
Divorce agreements, child support, and tax issues can be quite challenging. If you need legal guidance with any type of child support case, contact a professional Baltimore child support lawyer at Huesman, Jones & Miles, LLC. Call us at 443-589-0150 or fill out an online form today. Our offices are in Hunt Valley and Towson, Maryland, and we represent clients in Baltimore, Baltimore County, Bel Air, Columbia, Westminster, Essex, Monkton, Sparks, Parkton, Pikesville, Carroll County, Harford County, and Howard County.Posted on . This entry was posted in Child Support, Family Law. Bookmark the permalink.