Actually, the story said he had to pay $4,000 MORE a month after his wife stopped working. It never did say what his total payment was. My guess is that the were each paying about $4,000 a month, and he was required to pick up what she was no longer paying. $96,000 a year is not chicken feed, even for a guy making his salary. Is child support tax deductible, does anyone know? If these are after tax dollars, that really is a big bite.
That was really confusing, wasn't it? I *think* what she meant was 4K in addition to what he spends when the kids live with him and what he is putting away for their college education. So we are talking about him writing a 4K check to the ex-wife every month. Originally he did not write any check to the ex-wife.
Nope, after-tax dollars.
Is child support tax deductible, does anyone know?
No, just as most expenses for children living with their married parents are not tax deductible. I say most, because of the deductions for things like medical care & college tuition.
The state also has something called family care, which would include a portion for something like alimony (called spousal support) & the tax deductibility of that pulls out a CS portion, as nondeductible & leaves the spousal portion as deductible for payer & taxable income for the recipient. If these are after tax dollars, that really is a big bite.
Course it is a really big bite. Paying the freight to raise kids is a big bite, even when the marriage is intact. Thing is, the parents are not as likely to think of it that way when they are still together. The guy probably pays more money to support Uncle Sam & other tax entities than he pays toward his kids.
Oh, you'll love the tax deduction deal--at least on the Fed level. The custodial parent gets to claim them, regardless of that person's income, unless he/she agrees to let the non-custodial parent claim them.
I have personally seen this result in a parent who refused to allow the non-custodial parent to claim the deductions, making her income eligible for "earned income credit" because child support isn't income. Sweet, huh?
Furthermore, in some states, it's a pre-tax percentage of the parents' income.
If anyone knows this to be different, please let me know ASAP. I'll have phone calls to make!