Divorced With Kids? Valuable Tax Breaks Could Be Yours

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    April 22, 2012 /24-7PressRelease/ -- Divorced parents need to know the child-related tax consequences of their divorce. For example, you or your former spouse might be able to claim your children as dependents, resulting in valuable tax savings. Typically, only the custodial parent can gain the tax benefits of claiming dependents, but in some cases, the noncustodial parent is instead allowed to do so. Sometimes divorced parents have joint custody, which adds another wrinkle to the tax issues of divorce.

Dependent Exemption Deduction

If you claim your qualified children as dependents on your tax return for 2011, you will be entitled to a $3,700 deduction per child, according to Smartmoney.com. The dependent exemption deduction will increase to $3,800 in 2012. To claim the deduction, your child must qualify as your dependent, which requires you to prove the following to the IRS:

- The child is related to you
- The child was under 19 years old and younger than you, or under 24 years old, a full-time student and younger than you in 2011
- The child lived with you more than half of the year
- The child did not provide more than half of their own support
- The child is not filing a 2011 joint tax return

Only one parent can claim the deduction, so you should seriously consider the issue of who gets to take the deduction along with other divorce tax issues when negotiating a divorce settlement. For parents with joint custody arrangements, two ways to tackle the issue are splitting your deductions evenly or alternating years in which you take the deductions.

Other Child-Related Tax Credits

In addition to the dependent exemption deduction, tax breaks that might be available to divorced parents, depending on their particular situation, include:

- Child Tax Credit
- Higher Education Tax Credits
- Student Loan Interest Deduction
- Tuition Deduction

Parents going through divorce should each contact an experienced divorce attorney to advise them on tax issues and other financial aspects of divorce and child custody.

Article provided by The Law Offices of James M. Newman and Associates, LLC
Visit us at http://www.monmouthlaw.com

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