Child Tax Credits After Your Divorce

Some of the most valuable tax credits are those that are granted to parents to help provide assistance with the costs of raising their children. But when parents are separated or divorced, who gets to take advantage of these tax credits?

There are different stipulations for each type of tax credit:

• Child and Dependent Care Credit. This credit covers expenses for child care options like day care so that you can work or look for work. The total credit amount of up to 35 percent of care expenses, up to $3,000 for one child and $6,000 for more than one, so long as those children are under 13 or disabled. For divorced parents, only the custodial parent is able to claim the credit.
• Child Tax Credit. This tax credit gives parents that have incomes below a certain level a $1,000 credit for each child under the age of 17. The custodial parent will usually take this credit, but the noncustodial parent can claim it if the custodial parent decides to release the dependency exemption to the noncustodial parent. The credit is also lowered for single parents or could be completely unavailable if gross income is over $75,000.
• Earned Income Credit (EIC). EIC is meant to provide low-income workers with tax breaks. A taxpayer’s ability to claim this credit depends on adjusted gross income and earned income, and for parents, the total amount of the credit depends on the number of kids. Only the custodial parent can claim EIC in a divorce. Alimony and child support paid to you does not qualify as earned income.

For more information on how your taxes could be affected after a divorce, speak with a dependable family law attorney at Bryan L. Salamone & Associates.