One of the first questions that comes to mind when you know you will pay child support is this: “Can You Write Off Child Support in Iowa?” or “Can I write off that monthly payment at tax time?”
This is a more complicated question than it appears. Multiple tax issues affect more than one line of federal tax filing. A tax credit could be available. Additionally, the Federal Tax Refund Offset Program could help if child support is delinquent.
Here is information about child support payments and taxes if you’re an Iowa resident and you’re getting a divorce.
Child Support Payments and the IRS
Can you write off child support payments on taxes in Iowa? No. The Internal Revenue Service considers child support payments as tax-neutral no matter what state you live in. The payer can’t deduct child support on their annual federal tax filing. Additionally, a parent who receives child support doesn’t have to report these payments as income on their tax filing.
Iowa Tax Deduction for Child Support
The Iowa Child Support Guidelines in Chapter 9 of the Iowa Court Rules mirror the federal regulations. They dictate that you can’t write off child support payments. Iowa has also put in place specific programs to handle child support collection and tax-related matters to ensure a parent makes these payments. Programs include the Iowa State Setoff Program and participation in the Federal Tax Refund Offset Program.
The setoff program, which operates under Iowa Code section 421.65, lets the state intercept various types of payments to collect past-due child support. Examples of payments where the state can intervene include state tax refunds, casino and sports wagering winnings, state-issued vendor payments, and Iowa Lottery winnings.
If you expect to receive one of these payments and you are a parent who is delinquent in paying child support for three consecutive months or more, the court system will check to confirm this outstanding obligation. Then, it would withhold or “set off” money to pay the past-due child support. You can challenge the set-off within 15 days of receiving a notification.
When Is Child Support Eligible for Federal Tax Refund Offset Program?
Iowa participates in the Federal Treasury Offset Program to collect past-due child support payments. So, the state can collect directly from tax refunds of parents who owe support.
Your case becomes eligible and gets submitted to this program by the child support agency if:
- The custodial parent receives Temporary Assistance for Needy Families (TANF) benefits, and the noncustodial parent is at least $150 behind in payments
- The custodial parent does not receive TANF benefits, and the noncustodial parent owes at least $500 in child support
When your case qualifies for offset, you’ll receive a notice explaining the intended tax refund interception and your right to contest the offset decision.
Child Tax Credit
Although you cannot write off child support on your taxes, you can access several tax benefits as a paying parent, such as the Child Tax Credit.
The IRS provides guidelines about which parent can claim a child for tax purposes. According to these guidelines, the custodial parent, defined as the parent with whom the child lives for the greater part of the calendar year (most nights), has priority.
However, the custodial parent can release this right if both parents agree and document their arrangement, such as signing a Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent (IRS Form 8332).
The federal child tax credit entitles a custodial parent to reduce their tax liability directly with a maximum credit of $2,000 per qualifying child. If the credit is more than the amount of taxes owed, the additional tax credit may be refundable.
Get Help from an Iowa Family Law Attorney Today
Handling child support payments and tax matters requires careful attention to complex regulations and deadlines. While child support payments aren’t tax-deductible, proper planning and understanding of tax benefits can significantly improve your financial situation.
At Arenson Law Group, PC, our Cedar Rapids family law attorney can review your child support arrangement, explain tax benefits, help you contest incorrect offsets, and ensure compliance with state and federal regulations. Additionally, we can help if you believe your child support order should be modified because of a change in circumstances, such as a job loss or a large raise.
No matter what circumstances surround your child support issue, whether you’re the spouse waiting for support to be paid in a timely manner or you’ve fallen behind on payments, call us for help. We’ve handled all manner of child support issues, and we can help you, too.
Call us at (319) 363-8199 or contact us online for guidance.
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