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Careful: Child Support May Affect Your Taxes

After a divorce in which the couple has children, it's almost a guarantee that someone is going to be paying child support. So how are you supposed to declare that on your taxes?

If you're the non-custodial parent, you probably aren't claiming the child as your dependent on your tax return, unless your court documents explicitly state that you are. But you're still contributing to your child financially. Shouldn't you get a tax break too?

The short answer is yes. The long answer is that you're going to have to read the fine print.

Child Support Is Exempt From Federal Income Tax

Here's the good news: any money you pay toward court-ordered child support is tax-free when it comes to federal income tax. But that's not the same as tax-deductible.

Tax free means you and the recipient, in this case your child, don't have to pay income tax on the money. If your income tax is pre-deducted from your paycheck by your employer, like it is for most workers, then you can get that money back when you file your taxes.

But the money you pay in child support is still part of your income, you can't deduct it from your total income and claim a tax deduction. Still, any kind of tax break is a good deal.

It Matters That You Call It 'Child Support'

The IRS treats child support and alimony differently when it comes to taxes. To get the tax free status, the money paid must be part of court-ordered child support.

If alimony and child support are lumped together as "family support" in your divorce papers, you can't claim it as tax-free.

Alimony is tax deductible for the payer, but the payee must declare it as income, which means less money for your child. You might want your lawyer to alter the language so child support is separate from alimony.

Protect Yourself From a Tax Audit

The best way to avoid extra attention from the IRS is to make sure all your paperwork is correct the first time.

You could try to do it yourself and if you do, there are free online resources to help you understand the tax system. A good place to start is at FindLaw's Tax Law articles.

Another option is to seek professional help, like from an experienced Atlanta family law attorney, so that you know you're doing it right. Then you can enjoy the tax break without the stress.

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