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How child support affects taxes and exemptions

Maryland parents who pay child support cannot claim the child as a dependent unless they have a written document from the custodial parent agreeing that they will not claim the child on their taxes. Eligibility for the dependent tax exemption is generally based on with who the child lives and not on who provides the bulk of support. For the noncustodial parent to receive the exemption, it is also necessary for both parents to sign IRS Form 8332 which is then filed along with the noncustodial parent's tax return.

Child support is not deductible by the parent who is paying. The support is also not considered taxable income to the recipient.

It is not possible for both parents to claim the same child as a dependent or to split the exemption even if they share custody. Sometimes, parents who share custody claim the child in alternating years. This is something parents must be careful to budget for, and it is usually best reinforced with a legal agreement to avoid any misunderstandings.

During a divorce that includes children, there are complicated issues regarding child custody and support that must be decided. Even if parents are not initially in agreement, it is still possible to move forward with a positive parenting relationship. It might be possible to negotiate an agreement using attorneys but without turning to a judge. In a courtroom, a judge will decide based on an interpretation of the child's best interests. Child custody is determined using a formula, but there may be some room for flexibility and consideration of costs such as medical expenses. Whether child custody is settled in negotiation or litigation, an attorney may be able to work with a parent in order to strategize the best outcome.

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