It can be complicated to determine which parent will claim the child tax credit in a Florida divorce. Only one parent can claim the child as a dependent each year. The IRS monitors this closely by checking social security numbers to make sure both parents are not taking advantage of the tax savings in the same year. Here, we explore what qualifies the child to be claimed as a deduction, and which parent can claim the child as a tax deduction in a Florida divorce.
Does the Child Qualify as a Tax Deduction?
First, it’s important to be certain that the child qualifies as a tax deduction. The IRS has five considerations. The child:
- Must be your son, daughter, or step-child;
- Must be under the age of 19 at the end of the year, a student under age 24, or permanently disabled;
- Must have lived with you for more than half the year;
- Must not have provided more than half of his or her own support for the year; and
- Cannot file a joint return for the year (e.g. with his or her spouse).
Once the child meets the IRS qualifications as a dependent, the parent that provides the most financial support for the child, or the parent with primary custody of the child, can generally claim the child as a dependent.
Negotiate for the Child Tax Credit During the Divorce
In some circumstances, like as part of the separation agreement, one spouse might give up the right to claim the child as a dependent. In that case, the parent forfeiting the right to claim the child as a dependent must submit IRS Form 8332. In fact, the right to claim the child as a dependent can be a point of negotiation in the divorce proceedings. In some cases, one spouse will let the other spouse claim the child as a dependent as part of the separation agreement. Other times the parents agree to claim the child tax exemption on alternating years.
The best way to get the child dependent tax credit is to negotiate for it during the divorce. If you are not the parent with primary custodial responsibility and do not negotiate for the child dependency during the divorce, the court will only award it to you in extenuating circumstances.
The court’s goal is for parents to carry out time-sharing schedules. Sometimes, the only way to do that is by granting the non-local parent a tax deduction to offset the travel expenses, such as plane tickets.
Sometimes the court will grant the child dependency exemption to a non-local, non-custodial parent who must incur travel expenses to see the child. Other times the court will use the child dependency exemption as a sanction for nonpayment of financial obligations on behalf of the children.
How Does the Court Decide Who Can Claim the Child Tax Credit?
If you live with the child’s other parent for part of the year and are not married or do not have a child responsibility agreement, the parent who provides more than 50% of the child’s financial support can claim the child as a dependent for that tax year.
If you and the other parent share custody and provide equal amounts of child support, it is more difficult to determine which parent can claim the child as a dependent. In this situation, courts often make the decision on the basis of the best interests of the child.
In cases like this, the IRS provides a “tiebreaker” test.
To determine which parent can treat the child as a “qualifying child” and thus claim the child as an exemption the following rules apply:
- If the parents can file a joint return, they would both claim the qualifying child.
- If the parents cannot file a joint return, the IRS will treat the child as a dependent of the parent with whom the child lived for the majority of the year. And if the child lived with each parent for the same amount of time, the IRS will treat the child as a dependent of the spouse with the higher adjusted gross income (AGI).
Are There Other Tax Credits and Exemptions I Can Request in a Florida Divorce?
While the child tax credit is the most valuable, there are other exemptions and tax credits that can make a big difference to your taxable income. These credits and exemptions include:
- The child tax credit
- Head of Household filing status
- The credit for child and dependent care expenses
- The exclusion from income for dependent care benefits
- The earned income credit
It is important to note that IRS decisions do not impact child support payments. Child support payments are not deductible by the paying parent and are not considered taxable income for the parent entitled to receive payments on behalf of a supporting child.
Child Care Tax Credit
People sometimes confuse the child tax credit with the child care credit.
The child tax credit is given to the parent who is supporting the child in the home for the majority of the time.
The child care credit is provided to give parents assistance with paying for child care, such as daycare, before and after care, and summer care. However, just because you were granted the child dependency credit does not mean that you also have the right to claim the child care credit, too. The parent who pays for child care is the one who can claim the child care credit. If both parents pay for child care, each parent can claim the amount they pay themselves.
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If you have questions about Florida divorce, contact the Law Office Jody L. Fisher today.