It’s essential to understand the ins and outs of child support, including whether it counts as income for the receiving parent. In Colorado, child support payments received by a custodial parent are typically not considered income for tax purposes. The Internal Revenue Service (IRS) does not classify child support as taxable income for the recipient. This means that if you are the parent receiving child support, you do not need to report those payments as income when you file your federal income tax return.
How Child Support Works During Tax Season
Child support is not tax-deductible for the parent making the payments. The parent making child support payments cannot claim these payments as a deduction on their federal tax return. While child support itself is not considered income for tax purposes, other forms of financial support, such as alimony or spousal maintenance, may have different tax implications. Alimony payments, for example, used to be considered taxable income for the recipient and were tax-deductible for the payer, but this law was later reversed. Now, neither child support or spousal maintenance is taxable or deductible. Because these are subject to ever-changing laws, it’s important to check with your attorney before entering into agreements or filing taxes!
Why Child Support Is Not Tax-Deductible
Child support is considered a personal expense and does not qualify for any tax deductions or credits. Because of this, child support payments made by the non-custodial parent are not tax-deductible at the federal level or for state income tax purposes. The primary reason for this distinction is the underlying purpose and nature of child support:
- Child Support Is for the Benefit of the Child: Child support payments are intended to provide financial support for the well-being and upbringing of the child. The focus is on the child’s needs, and not meant to generate income for the custodial parent.
- Tax Code Provisions: The U.S. tax code has specific provisions that govern the tax treatment of different types of payments. Child support falls under these provisions, and it is explicitly excluded from being considered taxable income for the recipient. This ensures that the financial support received for the child’s benefit is not subject to taxation.
How To Stop Child Support From Taking Your Tax Refund
To stop child support from taking your tax refund, you generally need to address any outstanding child support arrears or resolve any issues that have led to the interception of your refund. Here are the steps you can take:
Pay the Arrears: If you owe unpaid child support, the most direct way to prevent your tax refund from being intercepted is to pay off the arrears in full. Contact your attorney or the state’s child support agency to obtain information about the total amount owed and make arrangements for payment.
Negotiate a Payment Plan: If you are unable to pay the arrears in full, you may be able to negotiate a payment plan with the child support agency or with the opposing party/opposing counsel. They may agree to a structured repayment schedule that allows you to make regular payments until the arrears are paid off.
Request a Review or Modification: If you believe there is an error in the arrears amount or if your financial circumstances have changed, you can request a review or modification of your child support order through the child support agency or by having your attorney file a motion. If the agency or court determines that a change is warranted, it can adjust the arrears amount accordingly under certain circumstances.
File an Injured Spouse Claim: If you filed a joint tax return with your spouse, and your spouse owes child support arrears but you do not, you may be eligible to file an injured spouse claim with the IRS. This can help protect your portion of the tax refund from being intercepted due to your spouse’s arrears. This can be complicated at times and may require the assistance of an attorney and/or tax preparer.
Seek Legal Assistance: If you believe that the interception of your tax refund is unjust or if you encounter difficulties resolving the issue with the child support agency, it may be beneficial to consult with an attorney who specializes in family law. Our experienced attorneys can provide legal guidance and help you navigate the process to address your specific circumstances.
Penalty for Hiding Income for Child Support
Hiding income to evade child support obligations is a serious offense that can have severe legal consequences. Penalties for concealing income for child support purposes vary by jurisdiction but typically involve both civil and criminal penalties. Civil penalties may include an increase in child support arrears, wage garnishments, or liens placed on property and assets. In more extreme cases, individuals may face criminal charges, such as contempt of court or fraud, which can result in fines, probation, or even imprisonment. Courts take these matters seriously to ensure that children receive the financial support they need, and offenders may find themselves facing significant legal and financial consequences if they attempt to hide income to avoid their child support responsibilities.
Our experienced family law attorneys at Colorado Legal Group are here to provide the support you need during this challenging time. Your child’s future matters, and we’re committed to helping you secure it. For more information about navigating your finances through child support, contact Colorado Legal Group today!