Does the IRS Tax Child Support?
The IRS does not tax child support payments. If you receive child support, the IRS does not consider the payments to be income, so you don't have to report the money on your taxes. If you're on the other side, and you pay child support, you cannot take a tax deduction for the money that you pay.
Payments
Court-ordered payments from one person to another get different tax treatment depending on whom the money is intended to support. In a divorce case, for example, a court may order the husband to pay the wife $500 a month in alimony and $500 a month in child support. The alimony is money to support the wife, and it is a transfer of income from the husband to her. The IRS considers it her "income," not much different than if she had earned the money at a job. Child support, however, is money to meet the needs of the couple's children -- to pay for their food, clothing and other expenses. This is money that would have been spent regardless of whether the couple divorced or stayed married. It is not "income" to anyone, so the IRS doesn't tax it.
Language
For the IRS to view a payment as child support, it needs to be described as such in the divorce decree, separation agreement or other court-approved document that mandates the payments. Simply put, it isn't child support unless the document says so. Absent a specific designation, the IRS may well view a payment as taxable to the recipient.
Warning
Having a payment designated as "child support" in the payment agreement helps the recipient, because that person doesn't have to pay taxes on it, while the person who pays can't take a deduction. But having a payment designated as "alimony," "spousal support" or "family support" benefits the payer, because that person can take a deduction, while the recipient must pay taxes on the money. For that reason, the person who will be paying the money may try to get child support designated as alimony in the court-approved agreement. The IRS is aware of this tactic, so it monitors whether these "alimony" payments end, or drop dramatically, when a child reaches age 18 or 21. If it concludes that alimony payments were really child support, the payer will face back taxes, fines and penalties.
Deductible Payments
Child-related payments that would be deductible even if the couple were still married or living together remain deductible. For example, taxpayers are able to take a tax credit for some of the costs of keeping their kids in day care while they work. If a divorce decree gives the husband custody of the children and orders the wife to pay $500 a month in child support and $500 a month for day-care costs, the wife can't deduct the child support -- but she can take a tax credit for the day-care payment.
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