Child Support Payments

• Child support payments are not taxable. If you receive child support payments, you do not have to declare the income on your tax return. Parents who pay child support cannot deduct payments from their income. Child support is solely for the benefit of the child and never taxed. In order for income to be considered child support, the payments must be designated in a divorce or separation agreement, or an order must be established by the court.
  
  

Family Support Payments

• Some divorced or separated couples may be ordered to pay or receive "family support payments." These payments are treated as alimony and must be reported. Payments are taxed as income received by the recipient. The agreement under which the support is paid may designate a portion to child support. The remaining balance after deducting the specified child support amount is taxable. If you pay alimony, you may deduct the payments from your income.
  
  

Child Support and Dependency

• Although child support is not taxed, it can have an affect on who is eligible to declare a child as a dependent in order to receive the dependency exemption. According to the IRS, you must provide more than half of a person's total support in a calendar year to claim the dependent. If a parent is ordered to pay support and refuses to pay or owes arrears, the parent who provides more support is clear. In some cases, it may be difficult to determine who pays the most support since child support is designed to be equally divided between parents. The IRS created a special rule for parents who are divorced or legally separated. Under the rule, the custodial parent is the parent who has custody the greater part of the year and therefore has provided more than half of the child's support.
  
  

Tax Preparation Assistance

• If you need help preparing your taxes, you may be eligible for assistance through the Volunteer Income Tax Assistance (VITA) Program. The program offers free tax help to low- and moderate-income people who are unable to prepare their own tax returns. Certified volunteers across the country are available to help prepare basic tax returns. VITA sites are conveniently located at libraries, community centers, schools and shopping malls. To find a location near you, call 1-800-906-9887.