Although child support is a vital component of ensuring the well-being of children in situations of divorce or separation, these payments can dramatically impact your finances. As such, understanding the tax implications of child support is crucial to ensure your financial security. Please continue reading to learn whether child support is taxable income in New York and why connecting with our skilled Suffolk County Child Support Attorney is in your best interest.
Are Child Support Payments Considered Taxable Income in New York?
Firstly, child support is a court-ordered payment made by one parent to the other for the benefit of their children. It is decided on a case-by-case basis. Generally, the non-custodial parent is usually ordered to pay child support. Raising children is expensive. As such, both parents are responsible for financially supporting their children. This is true even if the parents were never married. Child support is necessary to ensure both parents fulfill their children’s obligations. Once child support is ordered, it must be paid. Failure to comply with court-ordered payments will result in significant legal consequences.
If you receive child support payments on behalf of your children, it’s crucial to understand that the state of New York does not consider it taxable income. If you are the custodial parent receiving support, you do not need to report these payments as income when filing your federal tax return. Taxes can typically be reduced by allowed deductions and exceptions. However, the Internal Revenue Service (IRS) explicitly declared that child support payments do not qualify as tax-deductible. This is because these payments are provided for the child’s welfare. Therefore, they should remain untaxed to give critical assistance to their upbringing.
Which Parent Gets to Claim the Child Tax Credit Following a Divorce?
While child support is not taxable in New York, there is a tax consequence to child support payments: who gets to claim the children as dependents to receive the dependency exemption? Generally, the custodial parent is entitled to claim the child as their dependent. However, if you have a joint custody arrangement, the IRS will consider the parent with the higher income as the custodial parent for tax purposes.
As mentioned above, Child support funds are exclusively for the child’s financial well-being. Therefore, they are not subject to tax implications. If you have any questions regarding child support in New York, please don’t hesitate to contact The Law Offices of Susan A. Kassel, P.C. Our legal team is prepared to help you understand how the tax-related responsibilities and exemptions related to child support. Allow our firm to represent your interests today.
