Terese J. Singer

Child Support and Taxes

Milwaukee Lawyer for Family Law Matters

A court's order to pay child support may complicate the taxes of both the paying spouse and the recipient spouse. Generally, child support is driven by parental income in Wisconsin, though other factors can also affect the child support order. It is crucial for parents to understand what counts as income where a child support order is based on a percentage of a parent's income. Those who are rightly concerned about how payments of this nature can impact their taxes after a divorce should consult an experienced Milwaukee child support attorney.

Child Support and Taxes

Many people are uncertain about how child support (or alimony) will affect their taxes after a divorce. Generally, both types of payments do have an impact on taxes. For example, those who receive alimony need to report such payments as income on taxes. The spouse paying alimony needs to receive a Social Security Number from his or her ex in order to be able to claim payments on taxes.

Usually child support has somewhat less of an effect on taxes than alimony does. The payer of child support must still report income the way he or she has already done. The income will not be decreased by the child support payments. There is no deduction for child support payments. Conversely, the recipient of the child support payments also doesn't include the amount in taxable income. It will not count as earned income for purposes of qualifying for an earned income credit, which is a refundable tax credit for low or moderate income workers, especially those with kids. An experienced family law lawyer can assess the relationship between child support and taxes in your case.

Claiming a Child as a Dependent

Although it's not reported on taxes, child support affects income taxes. In some cases, the payer of child support can claim a child as a dependent. Making payments for a child means that you partially support the child. The IRS considers someone a dependent of a taxpayer for purposes of federal income tax if the taxpayer has given at least 1/2 of the support for the dependent for the year, including clothes, shelter, and food. Someone can be a dependent and still have his or her own tax return, but can't file a joint tax return for the year, except to claim a refund. So, for example, a high school student with an afterschool job may still be dependent. In addition, if you claim a child as your dependent on your taxes, you must be able to show: (1) the child lived with you for at least 1/2 the year, (2) the child is related to you biologically, through step-parenting, fostering, or sibling, (3) the child is either at most 18-years-old or below the age of 24 if he or she is a student who has been in school full-time during at least 5 months of the year, and in either case, the child must be younger than you.

Tax Refunds and Child Support

Tax refunds can also be impacted by child support. The Child Support program of the Wisconsin Department of Children and Families utilizes intercepted state tax refunds in order to collect alimony, child support debts, medical support, birth expenses, medical support, interest and fees. The Department is willing to intercept state tax refunds where the past-due amount owed is at least $150, the child support agency knows the delinquent payer's Tax Identification or Social Security number, the case gets child support services from a local child support agency, and the case is a child support case in Wisconsin. Sometimes when payers file state tax returns in other states, Wisconsin works with the other state to intercept that return. The intercepted refund will go first towards any current support owed, to past-due support cases that are certified for tax interception, and after debts are paid, remaining refunds are sent back to the paying parent.

Experienced Family Law Attorney Serving Milwaukee Residents

Terese J. Singer is a divorce lawyer in Milwaukee who is dedicated to providing aggressive, but compassionate representation to her clients with regard to child support and taxes, among other matters. If you are concerned about the tax impact of child support payments, whether you are making or receiving them, please call our office. Our firm represents clients in communities including Port Washington, Mequon, Racine, West Bend, Waukesha, and Milwaukee, Ozaukee, Racine, Washington, and Waukesha Counties. Call us at (414) 271-6400 or via our online form.

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