Child Support and Finances

By Danielle Gilmore, J.D. | Legally reviewed by Melissa Bender, Esq. | Last reviewed May 24, 2023

You might have separated from your co-parent, and your child may live primarily with one of you. You may also worry about how you'll pay for or whether you'll receive child support payments for your child. Then you might worry about the amount of money involved. This article looks at the relationship between child support and finances. It also looks at general child support laws and how you can balance taking care of your child while taking care of your financial condition.

Child Support Orders

What does it mean to support a child? Under state law, every child has the right to receive financial support from their parents for their basic needs. Generally, a child support order makes a parent support their children until their 18th birthday. Sometimes it's extended to 19 if the child is still a full-time high school student.

The child support order outlines child support payments. Typically, the noncustodial parent, or the “obligor," makes payments to the custodial parent. You can think of putting child support costs into three categories:

General living expenses: Food, clothing, and housing
Medical expenses: Medical support, including health care, health insurance, and dental care
Childcare expenses: Childcare, daycare, babysitting

Child Support Calculations

State law determines the child support amount. The family law judge uses child support guidelines to order the paying parent to pay a specific amount of child support that meets the needs of the child. The cost of living in your state can factor into these guidelines.

The judge considers both parents' income to calculate the appropriate figure. Generally, “income" means your gross income before any deductions. The income includes money from your paycheck. But it can also come from other sources. Some of the sources may include:

Money from rental properties
Workers' compensation
Disability insurance benefits
Social Security benefits
Spousal support/alimony

Judges balance income with parenting time and earning capacity to decide on a basic child support award. If any of those factors change, the judge has the authority to modify the child support amount to reflect the changes.

Child Support Modification

Once a child support order or agreement is in place, the court can increase or decrease the child support amount under certain circumstances. If a parent's earning ability or a child's financial needs have changed, that could be enough to trigger a modification. Either parent can ask the court for a child support modification. You will have to show that there are enough changes in the circumstances to alter the current order. For example, if you got another job with lesser pay.

Bankruptcy and Child Support Arrearages

If you file a Chapter 7 bankruptcy, it will eliminate most of your debts. However, child support is an exception. If you're filing bankruptcy just to avoid child support payments, that tactic will not work. Filing for bankruptcy does not discharge unpaid child support payments. This means the paying parent's obligations on back child support remain in place.

Is Child Support Tax-Deductible?

No, it is not tax-deductible. The Internal Revenue Service (IRS) taxes you on income you use to support your family. Child support payments are no different. A custodial parent who receives child support does not have to claim the money as income.

Does Child Support Affect the Child Tax Credit?

If a child has parents who aren't married, only the parent using the dependency tax exemption can claim the Child Tax Credit. The parent with primary custody (usually the parent who receives child support) may use Form 8332 to release the exemption to the other parent. In that circumstance, the paying parent would qualify for the dependency exemption and the Child Tax Credit.

IRS Form 8332 and the Child Tax Credit

Certain individuals may claim a tax credit for their dependent children. Only the parent using the dependency tax exemption can claim the Child Tax Credit. A custodial parent may use Form 8332 to release the exemption to the noncustodial parent. Here, the noncustodial parent qualifies for the dependency exemption and the Child Tax Credit. For an explanation of who qualifies for the Child Tax Credit and how to calculate it, refer to the Instructions for Form 1040 or the Instructions for Form 1040A index for Child Tax Credit.

Child Support Enforcement

You can take action if a paying parent stops making court-ordered child support payments. In many cases, a state child support enforcement agency can assist you, even if you don't receive public assistance. The agencies have many child support services to help you with your child support case. They can lead you in the right direction to get the money that your child is entitled to receive. Federal law allows the Federal Government to intercept the obligor's income tax refunds to enforce a child support order. Here are some other ways for enforcement:

Garnishing wages
Revoking a driver's license
Revoking a professional license
Seizing property

Unpaid Medical Expenses

Failing to pay for unpaid or unreimbursed medical expenses may result in the same enforcement options as regular unpaid child support, also known as "arrearages."

Unpaid child support, including medical expenses, can be collected through wage garnishment, interception of tax refunds, license revocation, and/or contempt of court charges.

What To Do When You Can't Afford Child Support Payments

You can explore several options when you can't afford to meet your child support obligation. Those include the following:

Understanding the consequences of not paying support (for example, your passport application could be denied)
Discussing your financial situation with your co-parent
Considering taking out a private loan
Exploring Debt Relief Programs
Considering asking the court for a child support modification
Talking to a family law attorney

A Family Law Lawyer Can Help

Whenever finances and child support mix, it is usually a complicated situation. If there is a large sum of money involved, you are almost certainly better off speaking with a professional. For help understanding how child support affects your finances and support order, you may consider contacting an experienced child support attorney.

Learn About Child Support and Finances

Child Support Modification FAQ: Answers to frequently asked questions pertaining to child support modifications

Child Support Modification Tips: Advice for how to obtain a modification of a child support order, such as acting quickly when your income changes

Child Support and Bankruptcy FAQ: Answers to frequently asked questions about the impact of a parent's bankruptcy on child support orders, including its effect on unpaid back payments and bankruptcy discharge rules

Child Support and Taxes FAQ: Answers to frequently asked questions pertaining to taxes and how they are impacted by child support, such as the difference among state laws; claiming a child as a dependent; and more

Child Support and Taxes: Non-Custodial Parents FAQ: Answers to frequently asked questions about the Federal income tax implications of child support for non-custodial parents, including which forms to use and eligibility for the Earned Income Credit

The Child Tax Credit: In-depth information about the Child Tax Credit, available through the IRS, which allows the parent claiming a child as a dependent to take a tax deduction for that child

Uninsured Medical Expenses and Child Support: Basic information about non-custodial parents' responsibility for helping custodial parents pay for uninsured medical expenses as a component of child support, including the difference among state laws and procedures

Exemptions for Dependents (IRS): Online publication from the Internal Revenue Service detailing the application of tax exemptions for dependents, including the determination of dependent status for unmarried parents and the meaning of “qualifying child"