It’s that time of year again with tax return deadlines looming this month. For those of you who may be filing as a single parent for the first time and for more experienced filers who could be overlooking some tax breaks offered by the federal government, here is a quick list and brief description of tax exemptions, credits, and deductions available to parents.
Head of Household Filing Status – can be claimed only by the custodial parent.
Dependent Exemption – a set amount per exemption/child which can be claimed by the custodial parent or the non-custodial parent with a waiver, if your adjusted gross income isn’t above the maximum allowed. You will need a social security number for each child or an adoption taxpayer identification number.
Child and Dependent Care Tax Credit – a credit for a percentage of expenses paid up to a maximum of $3,000 per child against the amount of tax owed by the custodial parent, can be claimed only by the custodial parent owing taxes. You can’t claim the credit on a Former 1040-EZ, so file a Form 1040 or 1040A if you qualify for this credit.
Adoption Tax Credit – for qualifying expenses you paid to adopt a child. You must file a Form 1040 with the required adoption-related documents.
Child Tax Credits and Additional Child Tax Credits – can be claimed by the custodial parent or the non-custodial parent with a waiver.
Earned Income Credit – a credit for low-income parent who work and have earned income from wages, self-employment or farming below a certain threshold amount. You must be the custodial parent to be eligible.
Exclusion for Dependent Care Benefits – can be claimed only by custodial parent.
Student Loan Interest, Tuition and Fees Deduction or the Education Tax Credits – can be claimed by the custodial parent or the non-custodial parent with a waiver.
Health Insurance Deduction for Self-Employed Parent – if the parent paying the health insurance premium of any child under age 27 is a sole proprietor or an independent contractor, a deduction is available even if the child was not your dependent for the tax year.
Even if a custodial parent signs a waiver for the dependency exemption(s), the custodial parent is still entitled to claim all of the benefits listed above as being available only to the custodial parent. The waiver is usually accomplished using IRS Form 8332, but any written document using substantially similar language as Form 8332 will work.
If your Settlement Agreement contains no language regarding which parent claims the dependent exemption for each child, the custodial parent is entitled to claim it. If your Settlement Agreement contains no language regarding which parent claims the dependent exemption for each child and the parents have equal overnights, the parent with the higher adjusted gross income will be considered the custodial parent entitled to the exemption.
More information on qualifying for these various benefits is available on the IRS website.
The Law Office of Jeanne Coleman provides family law, dependency, and social security disability legal services throughout the Tampa Bay area. Jeanne is a highly experienced trial attorney with over 25 years of practice in these areas. She also offers collaborative divorce representation. Call her office today for a free 20-minute consultation at 813-253-2820.