Child
Support Exemption
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If you pay
or receive child support, the Internal
Revenue Service has a set of rules to
control the deductions and exemptions
that you are allowed due to payment or
receipt of the child support funding.
A special rule applies for determining
who gets the exemption for a child in
the case of a divorce or legal
separation. If you're the custodial
parent, you can claim the child as a
dependent. However, the noncustodial
parent can claim the Dependent Exemption
and the Child Tax Credit
for the child with the consent of the
custodial parent.
Terms of a divorce
settlement determine how child support
will affect your taxes.
The parent making the child support
payment can not deduct it from income
and the parent receiving the payment
does not have to claim it as income. For
child support to remain non-taxable, it
must be designated in the final divorce
decree as “child support.”
Child Tax Exemption:
To claim someone as an exemption you
must provide more than half of that
person’s total support in a calendar
year.
To determine which Parent gets the Child
Tax Exemption the parents must be:
- Divorced or
legally separated under a decree of
divorce.
- Legally separated
under a written separation
agreement.
- Living apart at
all time during the last six months
of the calendar year.
- One of both
parents provides more than half the
child’s total support for the year.
- One or both
parents have custody of the child
for more than half the calendar
year.
Rules state that the
parent who has custody for the greater
part of the year is the custodial parent
and that the parent will be treated as
the person who has provided more than
half of the child’s support. If your
ex-spouse pays more toward the child’s
expenses than you do but you spend more
time with the child and are responsible
for the majority of child care you will
get the child dependency exemption and
you can claim the child as your
dependent.
The non-custodial parent can claim the
exemption if both parents agree and the
following criteria are met:
- A written
agreement signed by the custodial
parent stating that they will not
claim the child as a dependent.
- A final decree of
divorce that states the custodial
parent will not claim the exemption
for the tax year and the
non-custodial parent attaches the
appropriate documentation to their
tax return.
- A final decree of
divorce that provides for the
non-custodial parent to claim the
child as a dependent with a
statement that $600 or more was
given in support to the custodial
parent.
The non-custodial
parent must fill out a form 8332 from
the IRS. Both parents must sign the form
and then be attached to the
non-custodial parent’s tax return.
The custodial parent may still qualify
as Head of Household, and may be
eligible for the Child Care Credit,
Exclusion for Child Care Benefits and
Earned Income Credit for that child. The
noncustodial parent can't claim these
benefits even though that parent can
claim the exemption.
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