Is child support considered Income

[mintz]

We get child support each month and we have been saving it for my child's college. Is this considered income? Do I need to pull the money out and save it? The account is in another state than I live....

Your thoughts would be appreciated. I do not want to be found doing something fraudulent.

[jennordhavn]

Yes, for purposes of the means test (line 8) and Schedule I (line 10) it is considered income. For purposes of the means test, if the amount varies, add the amounts for the last 6 months and divide by 6 to get the monthly average.

You must also include the savings account that you are depositing the money into as an asset. Hopefully you have enough exemptions to cover it.

[2Bshinyandnew]

Yes, for purposes of the means test (line 8) and Schedule I (line 10) it is considered income. For purposes of the means test, if the amount varies, add the amounts for the last 6 months and divide by 6 to get the monthly average.

You must also include the savings account that you are depositing the money into as an asset. Hopefully you have enough exemptions to cover it.

As Jennordhavn stated above, my understanding is that child support is considered income for the means test.

As far as the child support that has been saved being an asset, I would check your state exemptions. One attorney I saw advised me to open a separate checking account to deposit child support and alimony in, and as long as no other deposits were commingled into that account, I could let it grow and when I file for BK the entire balance of the account could be exempted per Florida Statute, even if the balance was $10K (not likely in my case, but theoretically, it could) In Florida, as in many/most other states, alimony and child support are exempt assets.

If you don't have a completely separate account for Child Support, I would open a new account ASAP and start to provide a clear paper trail for future deposits, and if past had been commingled, I would write down exactly how much, to date had been received and saved, and hopefully you can make a case to exempt it if you have to. If support payments come in via a personal check from the parent, make copies before depositing.

PLUS, child support and alimony is also exempt from levy or garnishment if there is a judgment against you, so that is another reason to separate those funds.

[jdphillips73]

imo, it should be counted as income when you file taxes, and the person paying it should be able to file it....

[mintz]

we have it in its own account and never had anything else deposited in that account. Once I hire an attorney, I will ask if it is exempted or not

[jennordhavn]

I forgot about child support being exempt in most states. It's good that you have it separated out so it's easier to show it's child support and therefore exempt. Good luck.

[jennordhavn]

imo, it should be counted as income when you file taxes, and the person paying it should be able to file it....

Why should the receiver of child support pay taxes on the money when the payor already paid taxes on it?? That doesn't make sense.

[jdphillips73]

Why should the receiver of child support pay taxes on the money when the payor already paid taxes on it?? That doesn't make sense.

Well
a) the person receiving the child support should report it as INCOME, because it is income.

b) the person that paid it cant even claim a deduction for paying it.

[2Bshinyandnew]

Well
a) the person receiving the child support should report it as INCOME, because it is income.

b) the person that paid it cant even claim a deduction for paying it.

IMO, this is an argument that doesn't really belong on a bankruptcy support forum.

Since you brought it up, for tax purposes you could argue that under certain circumstances the person paying it should get the dependent exemption on their tax return. That would be a valid argument. The above scenario makes no sense. Why pay double taxes on money intended for the support of children? Exactly who will benefit from taxing the payee for child support received? How would this benefit the payor or the child?

Why pay double taxes on ANY money, for that matter?

[OhioFiler]

IMO, this is an argument that doesn't really belong on a bankruptcy support forum.

Since you brought it up, for tax purposes you could argue that under certain circumstances the person paying it should get the dependent exemption on their tax return. That would be a valid argument. The above scenario makes no sense. Why pay double taxes on money intended for the support of children? Exactly who will benefit from taxing the payee for child support received? How would this benefit the payor or the child?

Why pay double taxes on ANY money, for that matter?

The person asking for the tax on child support feels CS should be treated the same as spousal support (i.e. the recipient is taxed and the payee gets a deduction).

This is not clear thinking. The payment of child support is for the needs of a child. Does he believe the child should be taxed? This is not a case of one adult being forced to care for another adult as spousal support is determined.

I suspect he's angry about having to pay child support. I paid it for nearly 20 years and never felt the tax burden should be shifted. I wasn't happy about how she chose to provide for the children with my money but I really had no say in the matter.

[ben1381]

From IRS publication 504:
Child support payments are not deductible by the
payer and are not taxable to the payee. Alimony is. Answer is quite simple unless there is a question whether payment is child support or alimony

[ben1381]

I need to clarify what I just wrote since this is a bankruptcy forum. Child support is NOT taxable income but IS income for the means test as was stated in an earlier post.

[fltoo]

Glad you clarified since you are comparing apples and oranges for this discussion.

BTW, JD and Ben, be glad you are getting away with giving so little money to the kids, because if you were in the home raising them, you would be shelling out a helluva lot more money.

[jdphillips73]

Glad you clarified since you are comparing apples and oranges for this discussion.

BTW, JD and Ben, be glad you are getting away with giving so little money to the kids, because if you were in the home raising them, you would be shelling out a helluva lot more money.

i doubt that because she doesnt even work and lives off of welfare and in a trailer with her brother. She is perfectly able to work, but refuses to and would rather live off of our taxes... she uses my money to support her cigs and beer tabs... plz, if you dont know the details dont put your foot in your mouth.

[DisneyGirl]

i doubt that because she doesnt even work and lives off of welfare and in a trailer with her brother. She is perfectly able to work, but refuses to and would rather live off of our taxes... she uses my money to support her cigs and beer tabs... plz, if you dont know the details dont put your foot in your mouth.

Sounds like your ex and my husband's could be sisters. I feel for you. We've been going through that my stepson's whole life. He was 8 months when they split up. She uses her support for beer, cigs, and online poker. Thankfully he'll be 18 in 5 months. Hang in there!