If you are preparing a tax return or filing paperwork for health insurance or other purposes, you may be required to list all of your income. But is child support considered income? Knowing the answer to this question is important so that you ensure you file your taxes properly and don’t prevent yourself from being able to receive benefits you might otherwise be entitled to.
What Is Child Support?
Child support is a financial payment from one parent to the other to help provide for the financial needs of their child. Child support could be paid through an informal agreement between parents or ordered by a court.
This financial support is intended to help pay for the child’s housing, food, clothing, medical, and other needs. Both parents in Louisiana are expected to financially contribute to their children.
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Does Child Support Count as Income?
Whether child support counts as income depends on the purpose for which you are being asked to supply income information. Some common scenarios where this question may come up include the following:
Tax Purposes
The Internal Revenue Service (IRS) does not count child support as income. You should not list the amount of child support you received on your tax return, or the federal government might tax it unnecessarily.
The IRS directs taxpayers not to include their child support payments received when calculating whether they must file a tax return when calculating their gross income. Child support received should also not be used when calculating the Earned Income Tax Credit.
Child support is also not tax-deductible for the payer. This means that there is no tax benefit to paying child support. However, medical expenses, adoption expenses, childcare payments, and other expenses related to your child can be significant, so you should keep up with all receipts related to your child.
Your child custody agreement may list which parent can list the child as a dependent for tax purposes. Having a dependent on your tax return can significantly decrease your tax obligation.
Need-Based Benefits
While child support is not considered income for tax purposes, it is generally considered income when applying for need-based benefits. For example, child support is considered income for Supplemental Nutrition Assistance Program (SNAP) benefits and by HUD when determining eligibility for Section 8 and LIHTC.
Likewise, other programs, such as those assisting with medical care, food, housing, utilities, and clothing, may ask about child support and consider it income when determining if you (and your children) are eligible for assistance.
Mortgage or Loan Applications
When you are applying for a home or car loan, credit card, or other source of credit, you may be asked about all sources of income. The application may specifically ask if you receive child support and give you the option of whether you wish to include child support as part of your income.
By listing child support as income on such applications, you may be able to qualify for the loan or a higher amount of the loan. Credit institutions often look at your debt-to-income ratio, so the higher your perceived income, the better you may appear to the institution.
However, you may not want to include child support in your income if you want to ensure those funds are not consumed by the loan, or you are concerned about whether you will be able to steadily rely on child support.
What About Spousal Support?
Spousal support may or may not be considered income, depending on your agreement and when the spousal support order became effective. Divorce or separation orders or agreements executed before 2019 provided that alimony payments would be taxable to the recipient and deductible by the payer. When ex-spouses completed their tax returns, they had to include alimony payments as part of their gross income.
Agreements or orders executed or modified in 2019 or later are not taxable to the recipient or deductible by the payer, due to a change in the tax law.
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Contact the Louisiana Family Law Attorney at Knight Law Firm for Help Today
Contact our family lawyers at Knight Law Firm for a consultation. We proudly serve Shreveport, Monroe, Ruston, and the surrounding areas of North Louisiana.
Knight Law Firm – Shreveport Office
401 Market Street Suite 1006
Shreveport, LA 71101
(318) 569-8469
Knight Law Firm – Ruston Office
111 Kilgore Rd
Ruston, LA 71270
(318) 722-8919
Knight Law Firm – Monroe Office
1896 Hudson Cir N #1
Monroe, LA 71201
(318) 323-2213
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