Are You Confused About Taxes and Child Support Payments?

Child support is often one of the most contentious parts of divorce. You want equal access to your child, and you also want a fair contribution for their upbringing. Now that your divorce is finalized and you have started making or receiving child support payments, you may be wondering what you are supposed to do during tax season.

It is understandable if you are confused. That’s why The Law Office of Deidra Haynes is here. We do what we can to help our clients understand family law and its implications, even when it comes to tax season.

What If You Are Paying Child Support?

After the dust of your divorce has settled and child support obligations have been well outlined, you will likely be left with conflicting emotions, a bit of irritation, and a lot of questions.

Many Indiana parents have questions when it comes to paying child support and how it impacts their taxes. From a legal standpoint, the IRS considers child support payments a personal expense. Like rent and groceries, you can not write off your child support payments when filing your taxes. This is because child support is considered a direct contribution to the well-being of your child, not as income received from the non-custodial parent.

Just because child support payments are considered a non-deductible personal expense, doesn’t mean they don’t have a significant impact on your personal and professional life. Many people see child support as a one-sided contribution that is received and used by the custodial parent. Significant payments can delay retirement goals or prevent you from starting a business. They can make you feel beholden to a job you hate. It is understandable that you are stressed about these payments and looking for any relief.

If you feel like your child support payments are unfair, or your circumstances have significantly changed, or that the other parent of your child is misusing child support funds, call a family law attorney who can help you with your questions and concerns.

What If You Are Receiving Child Support Payments?

If you are the custodial parent and you are receiving child support, you may also have tax-related questions.

For the most part, we understand that any financial gain will likely be taxed, meaning you receiving payments from your former spouse may mean you need to pay more taxes every year. However, child support payments are not considered financial income like your salary or rental earnings. It is considered a direct contribution to the upbringing of your children. Because of this, it is not taxed.

What Happens If You Stop Making Payments?

Many parents may feel jaded by their child support payment agreement and simply quit making payments as a form of protest or to better their financial situation.

Do not do this.

Indiana does not take missed child support payments lightly. The consequences for failing to make child support payments will always outweigh any benefit you think you will get. The possible penalties you could face if you stop making court-ordered payments can include:

  • Wage garnishment, where your employer automatically withholds child support directly from your check.
  • Your driver’s license, professional licenses, and even your hunting and fishing license could be suspended.
  • Your tax refund could be intercepted to pay owed child support.
  • Missed payments are reported to credit bureaus and will damage your credit score.
  • If you willfully fail to pay, you could be found in contempt of court, which will result in fines or jail time.
  • You could have a lien placed on your property or have your assets seized by the state.
  • If you owe more than $2,500, you could be denied a passport or have your current one revoked.

Failing to make consistent, on-time payments can do more than damage your financial and legal standing; it can also impact your future custody or visitation matters.

What Can You Do If You Are Struggling to Make Payments?

We understand that sometimes, child support payments can feel impossible. If you are struggling with your payments, you have options, but you must act quickly to avoid missing these court-ordered payments.

Indiana allows you to petition the court for a modification. This requires there to be a significant change in your financial situation. If you have lost your job or you are suffering from significant medical issues, or if the current order is over a year old and the new amount would differ by at least 20%, you may be able to have your child support agreement modified.

It is important for you to avoid making deals with the other parent. Only the court can legally change the amount you are required to pay, and since child support payments are monitored by the state, paying less than what you are court-ordered to pay can be detrimental, even if the other parent agreed.

Can a Family Law Attorney Help?

If you are looking to modify your agreement or you need help understanding how taxes and child support payments work together, you should speak with a family law attorney as soon as possible.

The Law Office of Deadra Haynes understands that child custody and child support payments are a hard, emotional legal matter. You may be angry about your court-ordered payments or feel like you are being treated unfairly.

Call 317-785-1832 to find out how our family law attorneys can help you better understand your case and the legal issues surrounding it. If you need help petitioning the court for a modification to your child support payments, we can help you understand the process and present it in a way that is more likely to help the courts understand your position.