Credit For Child Support Paid

[Chowdahead]

I've had a couple of people come in and tell me that they heard there was a credit for paying child support and they want to claim it on their return. As far as I know, there is no such credit. Child support payments can neither deducted or reported as income as far as I know.

They weren't happy with my answer and they simply said they were going to go a place they heard was doing it. Me being studious, I decided to research the issue, and still found nothing to support their claims.

I can only surmise that preparers are actually claiming the child on these people's return for the exemption only. I've done several of returns like these, but the client always has the signed IRS release form from the other parent for that tax year.

As far as I know, the other parent must be aware and cooperate with this and file their return so that they only claim the Earned Income Credit, and not the exemption. In ATX, I've accomplished this by clicking the "Do not claim this dependent this year" box on the Dependents Data entry sheet.

Otherwise, when the return for the child support payer is transmitted, it will get rejected because the dependent SSN has already been used on another return, correct? Or if the child support payer files first, the actual custodial parent's return will get rejected, screwing up their situation.

When I try to explain the entire "exemption only" vs. EIC concept, their eyes gloss over because it is not an easy thing to explain to the average person.

Am I right on this?

[Jack from Ohio]

There is no credit for paying child support. Never has been. Unless another preparer is dishonest (perish the thought!!) there is no place for it on the tax return. The clients are confused by information from non-reliable, non-tax professional on non-IRS sources. It is a fact of life for a large percentage of the public.

It is definitely starting out as a wild year!!

[Pacun]

I've had a couple of people come in and tell me that they heard there was a credit for paying child support and they want to claim it on their return. As far as I know, there is no such credit. Child support payments can neither deducted or reported as income as far as I know.

They weren't happy with my answer and they simply said they were going to go a place they heard was doing it. Me being studious, I decided to research the issue, and still found nothing to support their claims.

I can only surmise that preparers are actually claiming the child on these people's return for the exemption only. I've done several of returns like these, but the client always has the signed IRS release form from the other parent for that tax year.

As far as I know, the other parent must be aware and cooperate with this and file their return so that they only claim the Earned Income Credit, and not the exemption. In ATX, I've accomplished this by clicking the "Do not claim this dependent this year" box on the Dependents Data entry sheet.

Otherwise, when the return for the child support payer is transmitted, it will get rejected because the dependent SSN has already been used on another return, correct? Or if the child support payer files first, the actual custodial parent's return will get rejected, screwing up their situation.

When I try to explain the entire "exemption only" vs. EIC concept, their eyes gloss over because it is not an easy thing to explain to the average person.

Am I right on this?

You are right!!! We will have this problem as long as the tax preparation profession doesn't raise their standards. The problem is that not all of us are at the same level academically or ethically. Have you noticed that doctors don't have any problems with prices or situations like this? Do you wonder why? Because they all charge a lot and no one talks bad about other doctors.

Some tax preparers, in order to get more clients, they talk crap about the preparer who is right. Some of them do it because they don't know much and some others do it because they are crooks. When my clients come to my office and start saying things like... the other preparer said... I stop them and I say: If I am going to prepare your taxes, I will do it the right way. If you prefer, you can go back to the other preparer.

I have 5 templates ready to go. New people, I work from those templates and I tell me how much they will owe or get, rather quickly. If they don't like my figures, I give them back their W-2 and they go away. I do that for all new people. In the past, I have worked on a return for a while, when I get the final product, they start saying... "but last year I got more than that"... "the other preparer entered my mileage and now you are saying they are commuting miles", etc. At that point, I would give them their papers and tell them, "in that case, I cannot prepare your taxes". My templates save a me lot of time.