The parent with physical custody of a child, whether during a separation or after a divorce, has a superior right over that of the non-custodial parent to allowed child tax benefits. Once the divorce decree is entered, some of those benefits could be transferred from the custodial to the non-custodial parent, but only if the decree or separation agreement provides for it or the custodial parent agrees to waive the benefit.
Parents with a joint or shared custody agreement need to be aware of the child-related tax benefits and handle the issue of which parent gets to take them in their parenting agreement. The time for parents, especially a non-custodial parent, to deal with these tax issues is before a divorce agreement is signed or a court order entered. Below is a brief explanation of the child-related tax issues.
Dependent Exemption
When you think about taxes and kids, the tax benefit most people think of first is the dependent deduction. This deduction always goes to the custodial parent, as defined by the I.R.S., who receives the right to take certain allowed income adjustments, itemized deductions, non-refundable tax credits and refundable tax credits. The non-custodial parent only receives the right to claim certain itemized deductions associated with the child. In 2002 a dependent exemption will reduce your taxable income by $3,000, which is reduced for higher income earners.
Income Adjustment
New for 2002 is the right of a parent to claim an adjustment to gross income of up to $3,000 for qualifying educational expenses for a dependent child attending a qualifying post-secondary school. A choice must be made between taking an adjustment to income or an education tax credit.
Laura Johnson
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For more information, contact the Family Law Offices of Renee M. Marcelle at (415) 456-4444, or online at http://www.familylawmarin.com/--
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