Let's say you recently got divorced from your spouse of 15 years with whom you have three children, ages five, seven and nine. Since your spouse received full custody and you are considered the noncustodial parent, a Pennsylvania family law court ordered you to pay $1,000 each month in child support. This is a significant financial burden, and you're probably wondering if you can receive any kind of tax benefit for making these payments.
The short answer to this question is, no, child support payments are not tax deductible.
How the IRS views child support payments
The IRS does not allow a Pennsylvania noncustodial parent to deduct the child support payments that he or she makes from taxable income calculations. As such, if you're paying child support, you must count the money paid as a part of your total income earnings.
Since it's the children who are intended to benefit directly from the child support payments, it's also important to point out that the noncustodial parent will not report child support as income. The IRS does not count received child support payments as earned income.
What about claiming my children as dependents?
Arrangements for claiming children as dependents for the purpose of receiving an IRS tax break will vary depending on the divorce case. The custodial parent who is physically caring for the children full time is usually the one who has the right to claim the children as dependents.
However, if the child support paying parent can make a suitable case that he or she provides half of the support for the children -- and the custodial parent has completed the Release of Claim to Exemption for Child of Divorced or Separated Parents, Form 8332 -- then the noncustodial parent may be able to claim one or more of the children as dependents.
Educate yourself about child support and taxes
Whether you're paying or receiving child support payments in Pennsylvania, it's important to understand how tax laws apply to your situation. This will allow you to file your taxes appropriately, save as much money as you can and stay in alignment with the law.