Tax Benefits for the Custodial Parent
It is that time of year again, when people begin to think about their taxes and what deductions they are eligible for. If you have recently gone through a divorce, you probably have more questions than ever about how to handle your taxes, how to file, and who gets to claim the children. The family law attorneys at the Law Offices of Schwartz | White can help you determine your dependent exemptions, and guide you through the new way of filing your taxes post divorce.
Tax Benefits to Look Forward To
While most parents try to arrange for a 50/50 custody agreement, more often than not, one parent ends up with a day or two more parenting time throughout the week than the other. This parent is considered the custodial parent. The custodial parent typically has more child-related expenses than the non-custodial parent, which is taken into consideration when child support is calculated. Even so, being the custodial parent is never financially easy. Because of this, the courts allow the custodial parent to claim the children as dependents and therefore, receive the subsequent tax breaks.
- Head of Household Status
Just because you got divorced does not mean that you should revert back to filing “Single.” If you meet the requirements for filing as Head of Household, you should do so, as doing so can significantly reduce your taxable income.
- Earned Income Tax Credit
If you were the lesser earning spouse and if you are now the custodial parent, you may be eligible for the Earned Income Tax Credit, which is a sizeable tax break for households with children. This coming year, an individual can receive a credit of up to $6,269, depending on how many children they have and how much they earn. To review the 2016 EITC schedule, visit IRS.gov.
- Child and Dependent Care Tax Credit
As the custodial parent, you likely have childcare expenses such as daycare, babysitters, transportation, school fees, sports fees, and more. Each of these expenses can be claimed on your taxes. Depending on your income, you may receive a credit of up to $3,000 for one child, and up to $6,000 for two or more.
- Children’s Dependency Exemption and Child Tax Credit
Typically, the custodial parent will claim the dependency exemption for any children of the marriage, but sometimes – especially if the physical custody is pretty much equal, and if the non-custodial parent contributes a great deal financially to raising the children – the parents may agree to share the exemption. For instance, one year the mom may claim the dependency exemption, while the next year, the dad will. If you and your former spouse choose to share the exemption, you must include a tax schedule in your child custody agreement.
Because the child tax credit is linked to the dependency exemption, if you share the dependency exemption, you must also share the child tax credit. This is something to consider before finalizing the custody agreement.
Consult a Boca Raton Family Law Attorney
Divorce changes everything, even your taxes. At the Law Offices of Schwartz | White, our family law attorneys can help you sort out the new tax implications that your divorce will create. To get a head start on your 2016 taxes, contact our Boca Raton family law firm at 561-391-9943 to schedule your consultation today.