The Connection Between Child Support and Tax Refunds

The Connection Between Child Support and Tax Refunds

State laws will have a strong impact on where your refund is distributed. Instead of getting wrapped up in massive paperwork, you should consider hiring tax attorneys offering custom-tailored solutions.

Time is something that everyone could use more of, especially in a new tax season. There is a small window of opportunity to capitalize on smart tax decisions as they relate to your child support. By knowing the basics, the IRS will have less incentive to come after you. 

Garnished Wages

Wage garnishment for child support is common, and an expected outcome when payments are behind. If you’re waiting on a big payday due to a tax refund, then there are some serious concerns about receiving the money. The good news is that private agencies are not allowed to garnish your wages. Few private entities have access (or rights) to garnish your wages without a lawsuit. 

It gets a little trickier when you factor in child support. If you are ordered to pay child support but refuse, a private entity like your job then has a little bit of leeway. That means under federal law, they can collect funds directly from you on behalf of a higher entity. Offsets also apply, but come with their own set of restrictions.

In general, you want to do everything possible before garnished wages. Once that happens, your taxes get sucked into the void. Unlike wages, there is no limit on the amount that can be taken from a tax refund. That can lead to several years of receiving no refund at all, and still owing money. 

The Tax man Comes First

Getting married does not absolve parents of their child support responsibility. A new marriage has no effect on the amount of child support owed, and unless discussed by the parents, won’t result in a reduction of what’s due. This can be a huge burden when tax time comes and you are expecting financial relief from a refund.

Issues occur when you need to pay the IRS while simultaneously being behind on child support. What you owe the IRS will be taken out first, and whatever is left (if any at all) will be gobbled up by child support.

In-between the IRS and child support, the state will take any nontax federal debts. Parents that are still paying on college loans may be able to defer that particular debt without penalty. It all comes down to having your paperwork in order, and of course following up with everyone in charge.

The important thing is to make sure that the IRS is paid first, long before everyone else. You’ll find that dealing with late child support payments offers a flexibility that the IRS may not be able to provide.  

Wrap Up

Child support is something that can’t be ignored. To protect your refund, it is important to understand any binding agreements associated with payments. The laws vary by state, so there is no such thing as winging it with the IRS. Refund optimization lies in your hands, or the hands of a very skilled lawyer. 

Christie Lewis
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