TaxHawk® Tax Tips
Divorce Tax AdviceIf you're the non-custodial parent and want to claim your child as a dependent, get Form 8332 signed before the divorce is finalized.
The custodial parent has the right to claim the child as a dependent unless that right is released to the non-custodial parent. If released, the waiver needs to be in writing, signed, and attached to the non-custodial parent's return. The waiver can be for one year, permanent, or any other way you want to do it. Form 8332 is the official IRS waiver, but you can also write up your own waiver and use it as long as it spells out who gets the deduction and is signed by the custodial parent. One item to note is that the custodial parent still has the right to claim Head of Household status, the Earned Income Credit, and Dependent Care Credit even though they have released the right to claim the child as a dependent. However, if waived, the non-custodial parent claims the $1,000 of Child Tax Credit along with the dependency exemption.
If you're in a higher tax bracket than your ex-spouse, modifying agreements to re-characterize payments as alimony would bring tax savings that could be shared by both parties. Child support is nondeductible by the payer, and is not included in the taxable income of the recipient. Alimony is the exact opposite, the payer deducts the alimony payment, and the recipient includes the alimony as income on his or her tax return.
If you're legally required to pay any medical expenses for your ex-spouse, deduct the expenses as alimony instead of on Schedule A as an itemized deduction.
If you do not have custody of your child, you can still deduct your child's medical expenses on your tax return if you're the one who pays the medical expenses.
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