Every year around tax time, parents across the country are faced with questions about the taxation and/or deductibility of child support payments made or received over the past year. When child support payments are relatively low compared to the income of the person making the payments, this may not seem like a significant factor to consider - but it's important to understand the tax consequences to avoid running into problems with the IRS.

California, like every other state, is held to the dictates of the Internal Revenue Service when determining federal tax consequences of support payments. Essentially, according to IRS Publication 504, for taxation purposes, child support payments are fiscally neutral - they are not deductible by the payer, nor are they considered to be income to the recipient.

In fact, the IRS specifically mandates that child support not be included in a calculation of gross income to determine if a tax return filing is necessary. These regulations are equally applicable to parents at the highest and lowest income levels.

Child support payments are obviously intended for just that - the support of the child, including medical, legal, personal and educational needs. The apparent intention of the IRS in enacting such regulations is to encourage the payment of adequate child support. If the recipient of the support, presumably the custodial parent, were to be required to claim the payments as income, it may have a chilling effect on the willingness of a parent to accept the money, thus resulting in detrimental effects on the child.

Of course, the calculation of child support amounts can be difficult, and it may be possible for the parents to arrange for a payment amount that protects both the child's interests and their own. Should you have any questions about the effects of child support on taxable income or any related issues, the advice of a family law attorney well-versed in these topics can be invaluable.