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How child custody can affect your taxes

On Behalf of | May 17, 2023 | Child Custody

When child custody decisions are made in a divorce, much consideration is to where the child will live and when, as well as how key life decisions will be made on behalf of the child. Another decision that you may not think of at first involves who claims the child tax credit and child tax deductions.

Claiming the child as a dependent

To claim the child tax credit and child tax deductions, you must be able to claim the child as a dependent. In general, the parent who has custody of the parent the majority of the year is the parent who will claim the child as a dependent. However, parents can agree ahead of time that the noncustodial parent will claim the child as a dependent. If parents share joint custody, they may alternate years in which they will claim the child as a dependent. Note that in any given year, only one parent can claim the child as a dependent.

What is the child tax credit?

For the 2021 tax year, the child tax credit confers upon a parent the right to claim a credit of up to $3,600 for children under 6-years-old and $3,000 for children between 6-years-old and 17-years old. Whether a parent is eligible for this credit depends on the parent’s income.

Other tax credits for parents

Some other tax credits a custodial parent may qualify for depending on their income and other factors are the earned-income tax credit and the child and dependent care credit. Custodial parents may also be able to file as head of household. Ultimately, parents in Bingham Farms can follow the IRS rules regarding child-related tax credits, unless they agree in their parenting plan to deviate from these rules.