Does Child Support Impact Taxes?
In this blog, we will be going over how child support in Michigan can impact your taxes. Goldman and Associates has over 400 videos on Youtube relating to child support and other legal matters that may impact your case. If you need more information on child support give Goldman and Associates a call or download our free ebook. Child support is an ongoing, periodic payment made by one parent for the financial benefit of a child following the end of a marriage or other relationship that involved children. Generally, the party obliged to pay is a non-custodial parent, while the party receiving payment is a custodial parent or other caregiver.
How Will Child Support Payments Affect My Taxes?
Unlike spousal support, child support payments do not count as income for the receiving parent. Likewise, they are not deductible from your (the paying parent’s) taxable income. This is mainly because those payments are not meant for the benefit of the receiving parent (it’s for the child) and is considered an obligation of the paying parent. Although on the surface it may look like this rule favors the receiving parent (usually the mother), this is not really the correct way to view child support.
How Will Child Custody Affect My Taxes?
Having physical custody of a child allows you to claim them as dependents when filing taxes. Claiming dependents has the following tax benefits:
- Allows you to file as a head of household
- Allows you to claim the child tax credit or $500 non-refundable Dependent tax credit
- Allows you to claim the credit for child and dependent care expenses
- Allows you to claim a higher earned income tax credit
- Allows you to exclude dependent care benefits from your taxable income
Once again, this looks like a substantial benefit to the parent that gets physical custody. However, it should still be noted that the parent is incurring expenses to care for the needs of those children. However, if that parent were able to find ways to reduce the expenses for providing for the children in their custody without undermining the wellbeing of said children, then the associated tax benefits might prove to be profitable.
The Michigan Child Support Formula has been in place since 1986 and is designed to provide adequate child support based upon the needs of children and the ability of both parents. Factors to be considered include parental income, family size, and living arrangements. Income is determined in a variety of ways, and the formula is updated yearly to adjust for changes in the cost of living.
Conclusion
Obtaining adequate child support is critical in supporting the needs of your child. On the other hand, being ordered to pay an amount that you can afford is also critical. Failure to pay can result in the seizure of assets, loss of employment, damage to your reputation and even jail time. Therefore, before you are saddled with an order issued by the court, it is vital that you contact an experienced attorney to ensure that you and your child’s rights are protected. With nearly 30 years of experience, our attorneys have been helping families deal with child support issues. Whether you are faced with paying an amount that you cannot afford or dealing with an uncooperative spouse who refuses to pay what your child deserves, Goldman and Associates, can help you out.
Child Support can be difficult and confusing, but with the right attorney, you will get the outcome you desire. If you need more information on Divorce and Child Support in The State of Michigan contact Goldman and Associates Law Firm. At Goldman and Associates, our attorneys are experts in family law and they will thoroughly examine all aspects of your divorce. With the best lawyers in Michigan, Goldman and Associates takes each and every case very seriously and gives you the outcome you desire.
For more information on divorce in the State of Michigan watch the video below and check out the Goldman and Associates YouTube channel for more videos on everything relating to law in Michigan. Make sure to give our attorneys a call if you have any questions.
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