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Child Tax Exemptions

Child Support

When the tax year draws to a close, all people are anxious about tax returns and exemptions. This article will look into child support and tax. Firstly, it must be noted that child support is tax free, however spousal support is not. Child support is tax free to both the parent making the payments and the parent receiving it.

While this is an advantage it is extremely important to ensure that the child support payments qualify as such by being designated as child support in a divorce agreement. If the agreement puts child support and alimony together or is not very specific, none of the payments made will be considered as child support and will thus be liable to tax. The individual to be taxed will be the one receiving the amount as it is deemed a form of income. So, instead of the parent receiving nontaxable child support, he/she will receive ‘alimony’ which is taxable income despite what the money is for.

Who claims the child as a dependent?

Any parent who wants to claim a child as a dependent on their taxes must be the parent who provides at 50% of the child’s financial support during the tax year. In the case of married couples, this is an easy thing to establish, however for parents who are separated things are complicated; this is because only one parent can claim the exemption for the dependent. Where parents lived apart at all times during the last six months of the calendar year or have a written divorce decree or maintenance agreement; a special rule applies to the dependent exemption. The rule is: if the child received more than half of their total support for the year from one or both parents and was in the custody of one or both parents; the IRS rules automatically assume that the custodial parent should receive the exemption. However, this exemption will be allocated to the noncustodial parent under the following circumstances:

The divorce decree contains a clause or provision where the custodial parent waivers his/her right to claim for the dependent exemption;

The custodial parent signs a declaration by way of the IRS Form 8332 giving up their right to claim for the dependent exemption. For this to be applicable for the noncustodial parent, they must attach the form on their tax return for the year.

Once signed the custodial parent gives up their right to the exemption for one year, a number of years or forever depending on what the parties have both agreed to.

Furthermore, by giving up the right the custodial parent also gives up the right to eligibility for child tax credit.

For unmarried parents, where the parents live together for six months of the year or do not have a written document they must establish who contributes more than 50% of the child support during the tax year and that parent can claim the child as a dependent.

If you are in Texas and would like to know more about child support and related issues contact a divorce attorney in Houston, Texas.


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Michael Busby is a Houston divorce lawyer who has been in practice for over 20 years and appears daily in the Family Law Courts of Harris County and Fort Bend County Texas

Busby & Associates , have two Houston Offices, one in Chinatown, Houston Texas and another in Independent Heights, Houston, Texas. Michael Busby is Board Certified in Family law by the Texas Board of Legal Specialization.