A client called me the other day asking whether his child support payments would be deducted from his paycheck before taxes or after taxes. The question is really more fundamental than that. Another way to frame the question is: “ Who gets paid first—the government or your children?” The answer is the government.
When child support is deducted from the paycheck of a non-custodial parent, it is deducted after taxes. In Missouri, federal, state, local, and FICA taxes will be withheld before the child support payment. I know it seems unfair. After all, when child support is calculated in Missouri, a parent’s gross income is used. However, in all fifty states, taxes are deducted before child support.
Another tax implication to consider is that the child support guidelines assume the custodial parent will get the benefit of claiming the children as dependents for federal and state income tax purposes. However, this is a point for negotiation in the divorce. As the non-custodial parent’s time with the minor children increases, the better the argument becomes for sharing the deduction. Couples often agree to alternate years on claiming the children as dependents—i.e., mom can claim the children in even years while dad can claim them in odd years. Where multiple children are involved, parents may agree to permanently allocate the children between the parents for tax purposes.
Always consult with your attorney or accountant when considering the tax implications in divorce.