Remarriage with Children: Income Tax Considerations
Alimony payments:- Usually must be included in the gross income of the recipient
- Can be deducted by the payer (if all requirements are met)
- The divorce agreement may designate alimony as nontaxable and nondeductible
Child support payments:
- Ordinarily considered nontaxable income of the recipient
- Are not deductible by the payer
Dependency exemptions:
- Ordinarily, the custodial parent is entitled to claim the exemption, regardless of who pays child support
- The noncustodial parent can claim the exemption if (1) the custodial parent agrees in writing (IRS form 8332 should be completed and attached to the noncustodial parent's return) or (2) a pre-1985 divorce decree or separation agreement grants the exemption to the noncustodial parent and the noncustodial parent provides at least $600 in child support for the year
Medical expenses deduction:
- Custody of the child isn't required
- Claiming the child as a dependent isn't required (although you must be eligible to claim the child as a dependent)
- Medical expenses are only deductible as an itemized deduction on Schedule A, Form 1040, to the extent they exceed 7.5% of adjusted gross income (AGI) on the tax return
1
Child and dependent care credit:- Can only be claimed by the custodial parent
- Must be for child-care expenses incurred so you can work
- Can claim, if qualified, even if you're not claiming the child as a dependent because you release the right to claim the child to the noncustodial parent
Child (and additional child) tax credit:- Can claim, if qualified, for a child you claim as a dependent
- Custody of the child isn't required
Education tax credits:
- You must be claiming the child as a dependent
- You must have paid qualified tuition and/or related expenses
1 Beginning in 2013, the 7.5% AGI threshold for medical expenses will increase to 10%, unless you or your spouse have reached age 65.
|
