Tax Deduction for children

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Tax Deduction for children

Unread postby nuke » Mon Jan 17, 2005 11:09 am

I have answered this question several times in the last week so I am posting a general info on it.

Generally the "custodial" or "primary" parent is entitled to the tax deduction UNLESS the divorce decree or parenting plan states otherwise. It is VERY difficult to change this after the fact so don't forget to include it the first time around.

The fairest way to divide this deduction would be as my ex and I have done:

Basically in every year that there is an even number of children that can be claimed as dependants, each parent claims the same number of deductions. In every year in which there is an odd number of children that can be claimed as dependants, Mother gets the extra deduction in odd numbered tax years and Father gets the extra deduction in even numbered tax years.

Don't forget to consider:
1. What happens as each child ages out. Consider that whomever claims the child as a dependant while they are in college is the ONLY parent who gets to claim those educational expenses as a credit. While lifetime learning credit can be taken as often as there are expenses, the Hope Credit (which is better) can only be used twice per student. You may wish to take this into consideration when deciding who claims which child when and even designate them.

2. Childcare expenses are only deductable for children you claim as dependants. If this will vary greatly between children and you pay a portion of this (even if you pay it only when the kids are with you), you may want to make sure you spell out that you alternate the child(ren) that you claim each year.

3. Include language that the CP must supply the NCP with the appropriate IRS form consenting to the dependant deduction by January 31st for the return due in April of that year. Unless your decree fulfills the following you WILL NEED this form:
1. Issued after 1984
2. Indicates that you can take the deduction regardless of whether you are current with support. (only a moron would agree to this, so it is unlikely that you wouldn't need this form)
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