Is Child Support Tax Deductible?

November, 01 2024 by Glynis Miller, CPA, MST

Millions of taxpayers are required to pay child support payments to an ex-spouse or ex-partner. The support payments may have been determined during divorce proceedings, a separation agreement, a state child support agency, or by mediation. No matter how it was determined, child support is not deductible for tax purposes. Thus, any person making child support payments cannot deduct them. Child support payments are also not required to be reported as income by any person receiving them.
 

Identifying Child Support

If payments to another taxpayer are solely for child support, determining the amount paid is no problem. However, identifying the child support payments may not always be so simple because the child support paid may not be clearly classified as child support or called that in any written agreement. Thus, when determining child support payments, discussing if any part of a payment to a former partner for alimony and separate maintenance payments is a must. Why? Because some alimony and separate maintenance payments might be reduced in connection to an event relating to a child covered by the agreement; an event, such as reaching a certain age. It is not necessary to try and determine the difference between alimony and child support for tax purposes, as neither will be deductible for divorce decrees and separation agreements that were originally executed after December 31, 2018, as discussed below in connection to TCJA.
 

Tax Cuts and Jobs Act in 2017

With the passing of the Tax Cuts and Jobs Act in 2017 (TCJA), changes were made to the tax policy regarding alimony and separate maintenance payments. TCJA effectively made all alimony and separate maintenance payments nondeductible for any divorce decree or separation agreement that was executed for the first time after December 31, 2018. If a divorce decree or separate maintenance agreement that was previously executed before January 1, 2019, was modified with reference to TCJA provisions that took effect after December 31, 2018, those payments are also nondeductible. Another way to state it is that a modification of prior divorce decrees and separate maintenance agreements must contain a notation in the new documents to specifically indicate that they would like the provisions from TCJA to govern the tax treatment of the payments, making them nondeductible. So, for these payments, it is clear that the child support is not deductible for income tax purposes. When alimony and separate maintenance payments stem from divorce decrees and separation agreements that were executed prior to December 31, 2018, problems may exist with identifying some of the child support payments in the agreement. Taxpayers need to view this carefully to avoid any potential audit issues. Due to the different rules, alimony deductions are being reviewed more often by the IRS, and records should be maintained.
 

Pre-2018 Alimony and Separate Maintenance Payments

For anyone looking at alimony or separate maintenance payments connected to agreements prior to 2019 before TCJA took effect, the payment amounts may not be fully deductible for the person making the payment. Thus, any person who receives said payments would not have to include the entire amount in taxable income. Two situations could result in portions of the alimony and separate maintenance payment being considered nondeductible and allocated to child support as follows:

1. If the alimony payments are reduced between six months prior to or six months after a child obtains the age of 18, 21, or age of majority in the local authority,
2. If a reduction must occur at the same age for each related child and payments are reduced two or more times within any period not more than one year before nor two or more years after that child reaches an age ranging between 18 and 24 if there is more than one child.

If either of these occurs, it is important to check the specifics for the jurisdiction where the taxpayers reside; if it can be shown that the proximity to the change of age is coincidental, the deduction may not be fully lost.
 

Other Issue

Another potential issue for those who have deductible alimony is that if a lump-sum payment is made to catch up with any unpaid child support payments, some portions of the alimony will no longer be deductible. Payments are applied to back child support first before being applied to back alimony. Regardless of how lump-sum payments are applied, all payments are considered nondeductible when paid for alimony under the new rules of the TCJA.