Marrying someone with children from a prior relationship can create a variety of income tax questions. Here are some points to consider.
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 generally claim the exemption if the child received over half of his or her support for the year from the parents, the child is in the custody of one or both parents for more than half a year, and (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 10% 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
If you have questions, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
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