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Pennsylvania Child Support Calculations May Change Due to the Tax Cuts and Jobs Act of 2017

The Tax Cuts and Jobs Act (TCJA) has wide-ranging implications, including how it may affect the calculation of child support payments. The TCJA became law in 2017, and it leaves payors and recipients facing no tax consequences for legally mandated child support payments. They are also not required to declare support on their tax forms.

While that looks good on the surface, most states, including Pennsylvania, consider net income when determining child support payments. Since the state looks at how much a couple earns after taxes, there is a chance the way support is calculated will be modified.

Many current divorce agreements stipulate which parent will declare dependent exemptions for their children on their federal income tax returns. The Internal Revenue Service used to allow parents to work this out among themselves. But now the act has eliminated personal/dependent exemptions, and no matter what their agreements state, parents will not be able to take exemptions for their children on their tax returns. Certainly, this law removed a significant bargaining chip from the negotiating table.

Additionally, the TCJA increased standard deduction values from $6,350  to $12,000 for those who file as single and from $9,350 to $18,000 for those who file as head of  household (HOH).

An HOH parent also can claim the $2,000 child tax credit for each qualifying child. Since tax credits reduce the overall amount of taxes a person pays, there are obvious financial benefits to a single parent being able to file as an HOH, which likely will become a major discussion in future divorce negotiations.

Though child support payments remain nondeductible and not considered income for recipients under the TCJA, the new law may indirectly lead to modifications in the amount paid and received.

The Law Offices of Jennifer Courtney & Associates, P.C. in Yardley, Pennsylvania understands that changes to the laws can create confusion. We assist individuals in the Bucks County area with these and other child support issues. Schedule an appointment by contacting us online or calling us at 215.493.3360.

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