Dependents & Tax Exemptions

There are a lot of financial issues that surround raising children. One such issue is which parent gets to claim the child as a dependent during tax season. Determining this can be a complicated process, so it’s important to retain the help of a lawyer who can walk you through each step of the process.

It may feel uncomfortable to discuss all of the financial aspects of being a parent during a custody dispute. When you live with your child full time, you simply pay expenses as they arise. You pay the rent or mortgage, you purchase groceries, and you buy your child new clothes when it is clear they have grown. When your child begins to split time between their other parent’s home and your own, you have to face the cost of having a child head on. You and the other parent must determine who pays child support and how much, often through mediation or the court.

Beyond the weekly or monthly child support amount, you have to address other financial aspects of having a child, such as additional child care, private schooling, health insurance, medical expenses, and taxes. Your child does not pay taxes yet, but you and their other parent do, and one of you has the potential to benefit from claiming your child as a dependent.

For help in handling these discussions with your child’s other parent, obtaining a financial arrangement in court, or assistance with how to deduct child support, contact a North Carolina custody lawyer at Breeden Law Office. Call us today at to schedule an appointment.

Dependent Deductions and Credits on Your Federal Taxes

When you file your federal tax return, there are often certain tax deductions, exemptions, or credits you can take to reduce your final income and tax liability. Deductions and exemptions reduce your final income calculation, which in turn, reduces your tax liability. Credits reduce your tax liability, which is based on your adjusted gross income.

As a parent, you are no doubt interested in dependent-related tax benefits. If you are able to claim your child as a dependent on your taxes, then you may benefit from multiple tax credits.

The Tax Cuts and Jobs Act of 2017 expanded the Child Tax Credit, which is relevant to any of your children under the age of 17. The expansion doubles the available credit from $1,000 to $2,000, and raised the amount of refundable credit to $1,400.

Additionally, if you are the custodial parent and able to claim your child on your taxes, then you may also benefit from the Child and Dependent Care Credit, which enables you to deduct certain child care expenses such as child support. For one child under the age of 13 years, you may deduct up to $3,000. For two or more children, you may deduct up to $6,000.

North Carolina’s New Child Deduction Amount

In North Carolina, the child tax credit has been changed to a child deduction starting in 2018. The deduction decreases your taxable income instead of the credit, which reduced the taxes you owed.

Depending on your filing status and your adjusted gross income, you may be able to deduct a certain amount per child.

If you are the custodial parent and filing as head of household in North Carolina, then depending on your adjusted gross income in 2018, you may deduct for each child:

• Up to $30,000 – $2,500.00
• Between $30,000 and $45,000 – $2,000.00
• Between $45,000 and $60,000 – $1,500.00
• Between $60,000 and $75,000 – $1,000.00
• Between $75,000 and $90,000 – $500.00
• More than $90,000 – $0.00

It is important to note that this information is relevant to North Carolina taxes and deductions ONLY.

Can I Claim My Child on My Taxes?

Whether or not you are entitled to claim your child as a dependent on your federal and/or state taxes depends on a number of factors. When there is no valid agreement or court order regarding the matter, then the issue typically depends on who is the custodial parent, according to the Internal Revenue Service (IRS). You are considered the custodial parent if your child lives with you at least 180 days or more out of the year. The parent who physically takes care of the child the most during the year can claim the child as a dependent.

If you are the custodial parent of your son or daughter, you should use Form 8332, the Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent to do the following:

• Release the exemption claim of your child to their non-custodial parent
• Retract a previous exemption claim

Negotiate Claiming Your Child as a Dependent

It is typically better to discuss who will claim your child as a dependent with the other parent as soon as possible and not let it become an argument at the beginning of every year. With the help of your attorney, you can negotiate this matter with your child’s mother or father. If it is clear that you are and will continue to be your child’s custodial parent, then you may want it in writing that you will always take the exemption until there is a significant change in the custody arrangement.

However, if you and the other parent are equally involved, then you may negotiate who claims the dependency and when. Some parents agree to switch off every other year. This way you each benefit from a tax benefit throughout your child’s life.