According to the IRS, Child support payments are neither deductible by the payer nor taxable to the recipient. When you calculate your gross income to know if you are required to file a tax return, do not include child support payments received.
Under divorce or separation instruments executed on or before December 31, 2018, alimony payments are deductible by the payer and taxable to the recipient. When you calculate your gross income to see if you are mandated to file a tax return, you should include alimony payments received under such an instrument.
However, under divorce or separation instruments executed after December 31, 2018, and under certain instruments executed on or before December 31, 2018, alimony payments are neither deductible by the payer nor taxable to the recipient. When you calculate your gross income to see if you are required to file a tax return, don’t include alimony payments received under such an instrument.
The amount of child support you provide typically does not matter. To qualify as a dependent, the child must not provide more than half of his or her support for the year. Moreover, the child must reside with you for more than half of the year. So, the child of divorced or separated parents is generally the qualifying child of the parent the child lived with the longest. This is known as the custodial parent according to the tax law.
However, the child can be the qualifying child of the noncustodial parent if all of these are true:
- One or both parents provided more than half of the child’s total support for the year;
- One or both parents have custody of the child for more than half of the year and;
- The parents are divorced, legally separated, or lived apart at all times during the last six months of the year.
In the above situation, the noncustodial parent can take the dependency exemption if one of these is true:
- The custodial parent waives the exemption by signing a Form to Release or Revocation of Release of Claim to Exemption for Child by Custodial Parent and;
- The noncustodial parent must attach the Form to the return.
Can Federal Income Tax Refunds be Taken to Collect Past-Due Child Support?
Generally, federal income tax refunds can be taken to collect past due child support if the amount owed to the custodial parent is $500 or more for federal, while the amount owed to the state is $150 or more. The state balance accrued during periods when public assistance benefits were paid to the family.
If your children are no longer minors the obligation can still be submitted for Federal Tax Refund Offset as long as all the criteria for submission are met. Past-due child support amounts exceeding the thresholds will be submitted. The thresholds are:
- $500 or more for amounts owed to the custodial parent and the custodial parent’s address is known and;
- $150 or more for amounts owed to the State for periods when public assistance benefits were paid to the family.
Furthermore, The Deficit Reduction Act of 2005 removed the restriction of submitting only the amounts owed to the custodial parent while the child was a minor. The Child Support Enforcement Agency (CSEA) implemented the change effective October 1, 2007, increasing 20% more obligors being submitted for Federal Tax Refund Offset.
When the IRS reduces funds owed by the Federal Government to a taxpayer and instead sends those funds to pay toward the taxpayer’s parent’s past-due child support debt, it is referred to as an offset.
The Federal Tax Refund Offset Program collects past-due child support from tax refunds of parents who have been ordered to pay child support. This process is referred to as an ‘offset’ as mentioned above. The process typically includes three federal agencies: The Federal Office of Child Support Enforcement (OCSE), the Financial Management System (FMS) of the Department of the Treasury, and the Internal Revenue Service (IRS).
Additionally, The Federal Tax Refund Offset Program was enacted by Congress in 1981 and was originally restricted to child support debts owed in public assistance cases (Aid to Families and Dependent Children (AFDC) or Temporary Assistance for Needy Families (TANF)). However, It expanded in 1984 to include child support debts in non-assistance cases. The Federal Tax Refund Offset is mandatory for states and must be used if a child support case meets the criteria described below even if regular child support payments are being made.
But, only child support cases receiving services through a state child support agency are eligible for the Federal Tax Refund Offset. There are minimum requirements for a child support case to be referred for a federal tax offset.
Moreover, If your children received funds from a TANF or Title IV-E foster care program (public assistance cases) and you owe at least $150 in past-due child support, a referral will be made to the IRS for a federal tax offset. If you owe past-due child support in more than one case, the case balances can be added together to reach $150.
If your children did not receive public assistance or only received Medicaid, and you owe at least $500 in past-due child support, your taxes will be referred for offset. If you have more than one child support case, the past-due balances can be added together to reach the $500 minimum owed.
What Happened To Child Support about COVID-19 and Taxes?
OCSE realizes the COVID-19 pandemic may continue to affect some customers as life continues to become more normal. If your circumstances have altered, OCSE may be able to help by reviewing your child support order to determine if the amount should be changed. Online services are available 24/7 through the OCSE MyCase customer service portal. You can conveniently check the status of payments, or new activity on your case, or securely communicate with OCSE.
To speak to or make an appointment with your caseworker, contact your local child support office. We encourage customers to make an appointment before visiting an office to avoid a long wait, and overcrowding, and to ensure the right person is available to assist them.
Furthermore, The American Rescue Plan Act of 2021 expanded the Child Tax Credit for the tax year 2021. According to the IRS, if you receive a refund when you file your 2021 tax return, any remaining Child Tax Credit amounts included in your refund may be subject to offset for tax debts or other federal or state debts you owe.
When Do I Need to Contact a Lawyer?
If you pay child support and are worried about missing any payments, it may be useful to reach out to a local child support attorney in your area to provide you with your options. Failing to make past due child support payments can negatively impact your tax return funds. It is considered a federal crime if you fail to pay your taxes.
Your attorney can provide you with legal advice and representation for your claims, and can guide you through the legal process in court. If you have questions about the laws in your area, your attorney can provide you with input on those as well.