Final answer:
Child support payments are neither taxable for the recipient nor deductible for the payor. These payments are made with after-tax dollars and are not reported as income by the recipient, nor can they be used to reduce the payor's taxable income.
Step-by-step explanation:
In the United States, child support payments are not taxable for the recipient, nor are they deductible for the payor. When a payor makes child support payments, they do it with after-tax dollars and must not include these payments in their taxable income calculation. Conversely, the recipient of child support should not include these payments as income when filing their tax return.
Understanding the distinction between child support and alimony is crucial. Unlike child support, alimony (when following decrees from pre-2019 orders) is taxable for the recipient and deductible for the payor. However, for agreements executed or modified after December 31, 2018, alimony is no longer deductible by the payer, and not included in the recipient's taxable income, similar to child support.
Thus, when reporting to the IRS, child support payments remain a neutral factor: not affecting the taxable income of both the party making payments and the party receiving them. This reflects a policy decision to exclude these payments from taxation issues, recognizing them as a parental obligation rather than income or tax-deductible expense.