Is Child Support Considered Income?

When filing paperwork for tax purposes, health insurance, or for other cases, you need to know whether or not receiving child support payments from a spouse counts as income in the state of California. Otherwise, you could put the wrong information on tax forms and fail to qualify for financial benefits you might otherwise receive. The San Diego family law attorneys at Boyd Law can help you with questions and issues relating to divorce and support agreements.

Child Support and Income During Tax Season

The tax implications of a child support agreement can be difficult to navigate on your own. An experienced lawyer can help you understand how the state and federal governments classify child support payments for both the payer and the recipient. According to the Internal Revenue Service (IRS), child support is not taxable as income to the recipient. This means the recipient gets the money tax-free. Child support payments are also not deductible by the payer. The payer cannot get money back or earn tax breaks for payments he or she makes to a former spouse for child support.

When you file your taxes, do not include any money you received in the form of child support payments as part of your income. Otherwise, the federal government will take taxes from your child support money. Gross income (when filing a tax return) does not include child support. Do not include child support as earned income when calculating the Earned Income Credit. No matter what state you live in or where your divorce took place, child support is not taxable income since it is a federal law.

If you’re applying for financial assistance programs, such as CalWORKs or TANF, do not list child support payments as income. Only report child support if the form or application specifically asks if you’re receiving court-ordered child support payments. Otherwise, the program will miscalculate your income and you miss out on opportunities to receive assistance for medical care, food, housing, utilities, and clothing. When in doubt about what to report, call the program’s help center and ask for assistance.

Is Spousal Support Considered Income?

Spousal support differs from child support for reporting purposes. If you’re receiving spousal support payments after a divorce in San Diego, it is taxable as income. The support payments are deductible for the person paying the spousal support, and they are taxable for the recipient. This means you should include the amount you receive in a lump sum or monthly payments for spousal support as part of your income during tax season and for other purposes.

Note, however, that the support you receive must be clearly listed on a divorce agreement. Payments your spouse gives you outside of a support agreement might not follow the same rules. The agreement must state that alimony is mandatory for it to be taxable. Voluntary payments are not deductible or taxable. Non-cash property is not spousal support and is not listed as income. Spousal support must come in the form of cash, money orders, or checks for tax purposes. Tax rules for spousal support can get complex. Contact a financial professional for assistance.

Get More Details About Your Specific Case

Child and spousal support payments can change over time, as can the tax rules from the IRS. In general, child support is not considered income, while spousal support is. Always check with a financial advisor and an attorney if you aren’t sure about whether or not to list a payment type as part of your income. Filling out official forms with the wrong information could lead to legal trouble down the road. Hire a divorce attorney for more information about support agreements in San Diego.