Child Tax Breaks, Am I Eligible For Tax Breaks If I’m the Non-Custodial Parent?
If you are the non-custodial parent, you do have certain tax breaks for your children that are allowed by the IRS. Tax law varies significantly by state, but your state should allow some tax breaks. Visit your state’s website for details or consult your tax preparer for details. Let’s take it step by step. Most of this information comes from IRS P-4449 of the tax code.
In this Divorced Fathers Rights guide outlines the tax breaks that you are eligible to claim on your federal income tax.
The Dependent Exemption for Non-Custodial Parents
In general, only the custodial parent is allowed to claim the children as dependents. However, this can be negotiated during the divorce and if both parents agree, the non-custodial parent can be given the right to claim the dependent child exemption. This can be done in exchange for a higher monthly child support payment, and it might make sense in cases where the father’s income is much higher than the mother’s income.
To be eligible, a few basic requirements have to be met. The parents must be legally divorced or separated; the child must have lived with one or the other parent for more than 6 months of the year (not living with a grandparent, for example); and the child must have received at least half his or her support from the parents during the year.
In order to shift who is eligible to claim the child as a dependent, IRS form 8332 will need to be filled out and filed.
Child Tax Credit for Non-Custodial Parents
If you have the right to claim the child as a dependent, you also have the right to claim the child tax credit for any child who is under 17 at the end of the tax year.
Earned Income Credit (EIC) for Non-Custodial Parents
In most cases, a non-custodial parent is NOT allowed to claim the earned income credit on any child, even if he has been granted the right to claim the child as a dependent. There are a few rare exceptions that can be found in IRS Publication 17.
Other tax breaks may apply, depending on your circumstances. These include itemized deductions for a child’s medical expense you paid, tax-free employer-provided healthcare benefits, tax-free health savings account (HSA) distributions, child care tax credit or tax-free childcare assistance and higher education tax credits.
These are the basic rules that apply to tax breaks for non-custodial parents. Refer to the IRS publications for more details or ask your qualified tax preparer.