Divorce makes virtually everything more complicated, especially when children are involved. More time and added communication are required of parents who are divorced or separated; everything from creating a time-sharing plan during summer vacation and agreeing on what expenses each parent is responsible for paying when it comes to college costs, to figuring out who takes the children to their bi-annual dental cleaning appointment involves complexities that single household families do not have to deal with. One more added complexity is that of taxes. Only one parent can claim their child as a dependent on their taxes, and this continues to be a point of conflict months or years after divorce.
What Are Child Tax Credits?
While the Tax Cuts and Jobs Act of 2018 eliminated the dependency tax exemption that parents could claim, a parent who claims dependents still has options for other tax benefits. These include a tax credit for the child and earned income credit. A parent can receive up to $2,000 in tax credit per child under the age of 17 and up to $500 for each child aged 17 to 19 or each child aged 19-24 who is enrolled in full-time college.
A tax credit offsets tax liability. For example, if a parent made $40,000 over the course of a year, their $2,000 tax credit would bump their taxable income down to $38,000. With two children under 17, they would double their tax savings. As such, parents with joint custody often disagree about who gets to claim their child or children as dependents, because only one parent can do so....