- Child support is not a deduction on state and federal income tax returns. Therefore, the non-custodial parent pays child support after they have paid tax on it. When the custodial parent receives child support, it is not considered income.
- In the last 40 years, the federal government has passed legislation to provide tax breaks for working families with children. These efforts (lower tax brackets, Earned Income Tax Credit, higher personal exemptions
and standard deductions) have created a wider gap between taxes paid by custodial vs. non-custodial parents.
- Some states (26) calculate child support based on gross income, while other states (24) use net income (See List).
- To determine net income, states often use tax withholding tables to determine the appropriate amount of federal/state income and social security/medicare taxes. For states using gross income, taxes are theoretically removed during the process to determine expenditures spent on the children.
- For tax breaks like the Earned Income Tax Credit, some states allow non-custodial parents to use it as a presumptive adjustment. In Georgia, it is a deviation that must be requested by the party.
- There are other hidden tax breaks, from health-care premiums to employer-sponsored pre-tax reimbursement/spending accounts being deducted from gross income on a pre-tax basis.
- Looking at the tax scenarios, it is clear that custodial parents enjoy numerous tax advantages (especially low income).
- While states like Georgia, have supposedly provided a way for non-custodial parents to request a deviation for the tax benefits enjoyed by the custodial parents, the data reveals that it has been rarely applied.
- Here is a list of articles about taxes.