Tax season is here, and as people in Maryland and across the country work to determine what they may or may not owe, they may have questions about potential deductions. For parents who make or receive child support payments, they may wonder how this impacts their tax return, especially since the laws changed just a few years ago. A new presidential administration often brings changes to the tax code, so what are the current laws in relation to taxes and child support?
Dependent children and taxes
For those who are considering this issue for the first time, this is an important issue to understand. Currently, child support payments are not treated as taxable income for the parent receiving the payment. The parent who makes the payments cannot list them as a deduction on his or her taxes either.
However, these payments may have an indirect effect on one’s tax return, as the custodial parent is allowed to claim the child as a dependent on his or her taxes. There is also a tax credit that may be available to the custodial parent known as the child and dependent care credit. This applies to those who incurred costs of care for a dependent child while that parent was working or searching for work.
Child support may require legal assistance
These types of questions can be complicated to sort through. One of the best ways for parents to avoid any disagreements over child support or determine who is able to claim a child as a dependent is by having specific parameters laid out in a divorce agreement or child support agreement. An experienced family law attorney can assist Maryland parents with that legal matter and ensure that the agreement encompasses important issues that parents may not even consider.