If you and another person are both responsible for the same
dependent, you may have wondered whether or not both of you are eligible to
claim the person as a dependent. Unfortunately, tax law is written in such a
way that only one person can claim a dependent on his or her tax return.
However, in some cases, both parents can claim a dependent and receive certain
associated tax breaks as long as the custodial parent agrees.
The tax breaks that are generally associated only with the
custodial parent include:
·
The dependent’s personal exemption
·
The child and dependent care tax credit
·
Head of household status where eligible
·
Exclusion for dependent care benefits
·
Child tax credit
·
Earned income tax credit
When the custodial parent waives the right to claim a
dependent and passes that right down to the non-custodial parent, however, that
parent can receive the following benefits:
·
The dependent’s personal exemption
·
Tuition and fees deduction/ Education tax credit
·
Child tax credit
Waiving these exemptions can be very helpful, financially
speaking, for the non-custodial parent. And, furthermore, doing so doesn’t
leave the custodial parent “out in the cold” when it comes to tax benefits.
This parent can still receive:
·
Head of household filing status when applicable
·
Exclusion for dependent care benefits
·
Child and dependent care tax credit
·
Earned income credit
If you are considering allowing someone else to have some of
your benefits and claim a child as a dependent or if you’re on the other end
and are hoping to get some of these benefits for yourself as the non-custodial
parent, you and the other parent are encouraged to speak with a financial
adviser about how to make the change. It’s usually a fairly simple and quick
process, but these professionals can handle all your forms and paperwork
carefully and answer any questions or concerns that you may have to ensure that
everything goes as smoothly as possible.