If you are in the midst of a divorce where children are involved, or you are unmarried and facing a child custody action, the tax implications of support and custody may not be forthright in your mind; but they should be. The costs of caring and raising a child are substantial. It is estimated that parents may spend more than $300,000 raising a child from birth to age 18. Because of this, the law requires biological parents to support their children financially.
The law also allows certain tax credits for those parents who shoulder the financial burden of raising a child. Commonly, there are exemptions that a parent may use to avoid the taxes imposed through employment taxes. Parents may also use the Child Tax Credit for additional savings.
For those who are divorcing or seeking custody, it is important to know how a parent can qualify for the credit. Essentially, there are a number of factors that can help in determining their eligibility. They include:
-Whether your child has lived with you for six months or more
-Whether you have provided more than half the child’s financial support during the year
-Whether the child is under age 18, or made less than $2800 if older and a student
-Whether the child has filed another tax return with someone else
If you have additional questions about the Child Tax Credit, or what your remedies are if the other parent has used the credit without your knowledge or authorization, an experienced attorney can advise you.