If you and your partner are both divorced, have kids from previous relationships, and now live together, tax season can raise questions about who gets to claim the kids. Let’s walk through an example with Cealena and Godson—a couple in this situation—who want to make sure they’re getting the most tax savings possible. Here’s a simple guide on how claiming kids work and the key tax breaks you might qualify for!
Meet Cealena and Godson
– Cealena: She’s divorced and has one child.
– Godson: He’s divorced, with two kids who split their time between him and his ex. His kids live with Cealena and Godson for half the year.
This is their first time filing taxes together, and they want to make sure they’re getting any tax credits available for having dependents.
Who Gets to Claim the Kids?
The IRS has rules for who can claim kids, mainly based on who the “custodial parent” is (the parent the kids live with most of the time). Here’s how it applies to Cealena and Godson:
– Godson’s Kids: If his kids spend exactly half the year with him, he’s considered a custodial parent. A custody agreement giving him the right to claim them can help if his ex wants to claim them too.
– Cealena’s Child: If Cealena has primary custody, she can claim her child on their joint return.
Tax Breaks for Cealena and Godson
Our tax expert SM has some advice on credits Cealena and Godson should look into:
1. Child Tax Credit (CTC)
– This credit provides up to $2,000 per child under 17.
– Filing jointly, they can claim each qualifying child.
Example: If Cealena claims her child and Godson claims his two, they could receive up to $6,000 in total CTC, depending on their income.
2. Earned Income Tax Credit (EITC)
– The EITC is for low- to moderate-income families, and the amount depends on income and the number of kids.
Example: Filing jointly with a combined income, Cealena and Godson might qualify for a larger EITC than if they filed separately.
3. Form 8332 for Non-Custodial Parents
– When divorced parents alternate claiming the kids, the custodial parent fills out Form 8332 so the non-custodial parent can claim them. This form prevents both parents from claiming the same kids and keeps things smooth with the IRS.
To discover more essential tax forms, read Introduction to Common U.S. Tax Forms.
Extra Tips from SM
To make tax season easier, here are a few more tips for Cealena and Godson:
– Keep Good Records: The IRS might request proof of where the kids lived and for how long, so save documents showing the kids’ time with you.
– Avoid Double-Claiming: Only one person can claim each child per year. If Cealena and Godson claim all three kids, their exes can’t also claim them.
– Check Income Limits: Credits like the CTC and EITC phase out as income increases. Check IRS guidelines to make sure you qualify.
Quick Example: Cealena and Godson’s Tax Filing
Here’s what their filing could look like:
- Claim the Child Tax Credit for all three kids, potentially getting up to $6,000.
- See if they qualify for the EITC, which depends on their combined income and the number of kids.
- Coordinate with Godson’s ex on using Form 8332 if they’re alternating who claims his kids each year.
To discover more essential about Parent tax, read Tax Basics for Parents: Understanding Child Support, Child Care, and Child Tax Credits
Wrap-Up
For couples like Cealena and Godson, getting the best tax savings means understanding who should claim each child and which credits you qualify for. Working with a tax professional can help ensure everything is filed correctly and that you’re maximizing your tax benefits.
If you’re in a similar situation, consulting a tax expert can help you avoid missing out on any important deductions or credits.
To discover more essential about tax, read Top 5 Tax Filing Software Options: Which One is Right for You?
FAQs: Claiming Dependents as Divorced or Blended Families
Q1: Who’s considered the custodial parent for taxes?
A: The custodial parent is the one with whom the child lives more than half the year. If parents split time equally, the IRS will consider factors like income or custody agreements to decide who can claim the child.
Q2: Can we both claim the same child if we both support them?
A: No, only one person can claim each child per year. If you’re filing jointly with a new spouse, you can claim the child together, but if your ex also claims them, it could lead to an IRS review.
Q3: What happens if my ex and I both try to claim our child in the same year?
A: If both parents claim the child, the IRS may flag both returns and ask for proof of custody. To avoid this, agree in advance on who will claim the child each year, and use Form 8332 if needed.
Q4: What is Form 8332, and when should we use it?
A: Form 8332 allows the custodial parent to release their claim on a child to the non-custodial parent. This form is useful if parents switch who claims the child each year.
Q5: Is there a reason not to claim a child as a dependent?
A: Sometimes, yes. If your income is too high to qualify for credits, it might make sense for the child to file their own return, as they may qualify for education credits or health insurance subsidies.