A tax deduction for children typically is available only to the custodial parent, who may claim the child as a dependent. But there are a few exceptions to this rule that may allow non-custodial parents to claim child tax deductions.
Possible Tax Deductions for Children
Having a dependent child qualifies a custodial parent for a variety of significant tax deductions for children. Possible child tax deductions or tax breaks include:
- Dependency exemption deduction – For each dependent child, a parent can claim this deduction, which, in 2012, amounted to $3,800 per child.
- American Opportunity credit – Worth up to $2,500, this credit is available during the first four years of a child’s time in college.
- Lifetime Learning credit – This covers up to $2,000 of a child’s higher education costs.
- Student loan interest deduction – This can cover up to $2,500 worth of student loan interest.
- Tuition deduction – Worth up to $4,000, this deduction covers tuition and enrollment fees for a child’s college education.
- Child tax credit – The credit can be worth up to $1,000 per child.
- Itemized medical expense deductions – These cover a child’s medical expenses that exceed a certain percentage of a parent’s gross income.
- Head of household status – A custodial parent can file as a head of household, allowing him or her a larger standard deduction.
- Earned income tax credit – For one child, the credit may be up to $3,169 and $5,891 in the case of three or more children.
- Child care credit – Worth anywhere from $600 to $2,100, depending on the number of children involved, this can go toward annual child care expenses.
The majority of these credits and child tax deductions are available only to the custodial parent. The only exception is with medical expense deductions, which the non-custodial parent can seek if he or she has had to cover a portion of the child’s medical expenses over the year.
Allowing Non-Custodial Parent Deductions
It is possible for non-custodial parents to reap the benefits of child-related tax deductions and breaks. To do so, the custodial parent specifically must grant the non-custodial parent the right to claim the child as a dependent. In doing so, the custodial parent effectively waives his or her own right to claim the child. To do so, the custodial parent must fill out IRS Form 8332, which grants the non-custodial parent the right to claim the child as a dependent for the current year.
Once all these requirements have been met, the non-custodial parent legally can claim the child as a dependent and take advantage of the many tax deductions for children that come with it. It’s important to note, however, that even if granted the right to claim a child as dependent, a non-custodial parent will not be able to file as head of household or claim the earned income or child care tax credits.
Help from a Richardson Divorce Lawyer
Concerns regarding divorce and tax filings aren’t uncommon, especially considering that, according to the National Vital Statistics Report, there were nearly 77,000 divorces in the state of Texas in 2009 alone. A Richardson divorce lawyer can advise individuals considering or facing divorce regarding the implications of divorce and child custody, such as tax deductions for children.