How Does the Child Tax Credit Work When There is Joint Custody?
The child tax credit is a tax benefit that can help lower the income of parents who have children. Many parents try to divide their time equally with their children, but this can make it tricky when filing taxes.
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When you have joint custody, only one parent is able to claim the child as a dependent on their tax returns unless the divorce agreement states that the non-custodial parent can claim the child and the exemption. In some situations, you may be able to give your ex-spouse the right to claim the child on their taxes through an IRS Form 8332. However, you will want to make sure that this is in writing so it does not become a problem when filing your own taxes.
Depending on the terms of your divorce agreement, you and your ex-spouse may have a specific arrangement about how you will share the child tax credits each year. If you have a 50/50 custody split, it is very likely that the parent who has custody for longer periods of time will be able to claim the child as a qualifying dependent. This means that they will be able to claim the tax credit and receive a tax refund for the amount of money they paid in support for their child during that year.
In addition, if you and your ex-spouse are living apart for the last six months of the calendar year, there is a special rule that allows the noncustodial parent to claim the child as a qualifying dependent on their tax return. In this situation, the noncustodial parent will need to have a written declaration from the custodial parent giving them permission to claim the child and the exemption.
You can also ask the court to allow you to claim your child as a dependent on your tax return. The court can do this if the custody arrangement is clearly defined and you can prove that you are the primary caretaker of the child for the year.
If your court allows you to claim your child as a dependent, then you will need to file your taxes together with your ex-spouse. This is a good idea even if you are still legally married since it will make the process easier and faster.
There are also other considerations if you and your ex-spouse share custody of the children. For example, if one of the parents lives in a different state than the other, the parent who has the children will be unable to claim the child on their taxes.
Another thing to keep in mind is the advanced payments that the government makes available under the American Rescue Plan. This is a federal program that allows the IRS to send tax benefits to parents based on what information they have on file.