Separation and divorce raise questions at tax time, especially regarding child support payments. You may file as an unmarried person if you have a final decree of divorce or separate maintenance by the last day of the tax year. If you are separated, but don’t have an official decree, then you may be required to file as a married person. When it comes to child support, the key points are:
- The person who receives the payments does not need to claim the amount as income; the payments are not taxable.
- The custodial parent is the one who may claim the child as a dependent for tax purposes. (This is the parent with whom the child spends the most time during the year.)
- The person making child support payments may not claim the payments as a tax deduction, and may not deduct the amount from taxable income.
- The only way a non-custodial parent may claim the child tax exemption is if there is a written agreement that the custodial parent will not make the claim. Additionally, both parents must sign Form 8332 and attach that form to his or her tax return.
- The tax exemption may not be split, even if parents have joint custody. But the tax exemption may vary year to year if such an agreement is negotiated with the divorce.
Please talk with a Salmon Sims Thomas tax advisor if you have questions.