Specialty tag(s): Child Support
Jack Wall | August 26, 2024
Child support is a central consideration in many financial decisions. Whether you are receiving or paying child support, it is crucial to know how it affects your taxes, ability to apply for a loan, and eligibility for public assistance. Determining whether it counts as income is an essential step in figuring out how it will impact your financial situation. This article will explain whether child support counts as income.
Child support may count as income, depending on the situation. We will explore the most common situations in which this question arises and clarify how child support is treated in each case.
According to the Internal Revenue Service (IRS), child support is not considered taxable income. This rule benefits those who receive child support because they do not have to report it on their federal income tax return.
If you pay child support, the IRS does not allow these payments to be counted as tax-deductible expenses. Therefore, you cannot use them to lower your taxable income and ultimately reduce your tax liability.
When applying for a loan, lenders may view child support payments differently depending on whether you pay or receive them.
If you receive child support, the lender may count it as income when determining whether you meet their income requirements for a loan. Counting it as income can enhance your ability to qualify for the loan.
Conversely, if you pay child support, lenders might consider this obligation when assessing your financial capacity to repay a loan. A child support obligation means less disposable income available to repay a loan, which can decrease the lender’s willingness to extend a loan to you.
Public assistance programs, such as Medicaid and TANF (Temporary Assistance for Needy Families), have a unique way of handling child support. If you receive these benefits, your child support payments may be redirected to the state to reimburse it for the assistance provided to you. As a result, you might receive only a portion of the child support payments or none at all.
Additionally, child support may be classified as unearned income, which could affect your eligibility for certain state-run programs. For example, the Texas Health and Human Services’ indigent healthcare program counts child support as unearned income. Therefore, low-income individuals who do not qualify for other healthcare services may earn too much to be eligible for this program.
You do not have to navigate the complexities of child support alone. The family lawyers at Goranson Bain Ausley have over 40 years of experience in handling child support issues. We are committed to providing you with expert counsel and comprehensive resources. Contact us today to schedule your consultation and explore your options with confidence.
Jack Wall is an exceptional attorney known for his unique blend of empathy and thorough legal knowledge. He collaborates with clients to help them prioritize what matters while advocating for them from a practical and empathetic perspective. Before becoming an associate, Jack served as a law clerk at Goranson Bain Ausley for two summers. He holds a degree from Baylor University School of Law, one of the nation’s top litigation schools, where he was awarded a full scholarship from the Del Sampels Memorial Endowed Scholarship Fund in Law. Jack specializes in marital property division, litigation, and child custody.
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