The IRS offers several tax breaks for taxpayers with children. However, these tax breaks decrease in number for non-custodial parents, since many tax credits have residency and support tests or requirements for eligibility. You cannot, for instance, claim a child support tax credit just because you are paying child support. There are instances, however, in which non-custodial parents can claim their dependent on their returns. As always, there are very specific rules and criteria for eligibility imposed by the IRS. But a quick look on the IRS’ website, or consulting with a qualified tax preparer, will get you off to a good start.
Even if you do not have custody of your child, you may still be able to qualify for a variety of tax deductions and credits. Depending upon your specific situation, you may qualify for both the Child Tax Credit and Earned Income Credit.
Claiming Dependents on a Tax Return
There are circumstances in which you may claim a child or dependent who does not live with you. Typically, you can do this only if the custodial parent agrees. It is not up to a family court to determine who is eligible to claim a child or any tax credits – this is squarely an IRS decision, and very strict guidelines are in place to ensure that the correct parent claims the dependent.
The amount you're able to claim for a dependency exemption is $4,050 for the 2017 tax year. This exemption phases out starting at an AGI, or adjusted gross income, of $261,500 for single filers, and $313,800 for married filing jointly. Single filers earning $384,000 or more, and married couples filing jointly who earn more than $436,300 will see a complete phase-out of this deduction for 2017. However, for tax years 2018 through 2025, personal exemptions were reduced to $0, which means they are unavailable for claiming on your taxes, but standard deductions were substantially increased to compensate for this loss.
If a custodial parent would like to pass on the dependency exemption to the non-custodial parent, he needs to sign IRS Form 8332, "Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent." After receiving this form, the non-custodial parent completes and files it along with her tax return. At this point, the non-custodial parent is able to claim an exemption for the dependent. The non-custodial parent may also now qualify for the Child Tax Credit (CTC) if other criteria are met, but she will not be eligible for the Earned Income Credit, or EIC. The custodial parent will still be able to claim the EIC if he meets the requirements for qualification.
Child Tax Credit and the Non-Custodial Parent
If you are eligible to claim your child as a dependent on your tax returns, then you may be eligible to claim the Child Tax Credit. In order to qualify for the CTC, you must meet seven requirements or tests, ranging from the age of the dependent to citizenship status and level of support provided. And, in order to qualify, both you and your child must meet these criteria. The CTC can reduce your tax liability to zero. In this case, the remaining amount of the credit is not refundable for 2017; however, if you claim the Additional Child Tax Credit, you may be able to receive the remaining CTC credit in the form of a refund. It is important to note, that the CTC is now refundable beginning in 2018 up to $1,400. To determine eligibility complete the worksheet on IRS Form 8812.
The IRS’s website offers resources to help you navigate the ins and outs of non-custodial tax credits. Its interactive tax assistant tools make quick work of determining your eligibility and next course of action. As always, if you’re unsure how to go about claiming tax credits as a non-custodial parent, it is not a bad idea to consult with your tax preparer who can help you figure which credits you qualify for that may just land you a refund a tax time.
- IRS: About Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent
- Forbes: IRS Announces 2017 Tax Rates, Standard Deductions, Exemption Amounts And More
- IRS: About Schedule 8812 (Form 1040), Child Tax Credit
- CNBC: Families will feel the pain of losing this tax break
- Smart Asset: All About Child Tax Credits
- IRS. "Qualifying Child of More Than One Person." Accessed Oct. 27, 2020.
- IRS. "Publication 501 (2019)," Page 13. Accessed Oct. 27, 2020.
- IRS. "Tax Reform Basics for Individuals and Families," Page 9. Accessed Oct. 27, 2020.
- IRS. "Claim to Exemption for Child by Custodial Parent." Accessed Oct. 27, 2020.
- IRS. "Divorced or Separated Individuals," Pages 9–10. Accessed Oct. 27, 2020.
- IRS. "Divorced or Separated Individuals," Page 11. Accessed Oct. 27, 2020.
- IRS. "Form 8332," Page 1. Accessed Oct. 27, 2020.
- IRS. "Publication 501 (2019)," Page 14. Accessed Oct. 27, 2020.
- IRS. "Instructions for Form 8863," Page 2. Accessed Oct. 27, 2020.
- IRS. "Publication 504 (2019)," Page 6. Accessed Oct. 27, 2020.
- IRS. "Understanding Your CP87C Notice." Accessed Oct. 27, 2020.
Tara Thomas is a Los Angeles-based writer and avid world traveler. Her articles appear in various online publications, including Sapling, PocketSense, Zacks, Livestrong, Modern Mom and SF Gate. Thomas has a Bachelor of Science in marine biology from California State University, Long Beach and spent 10 years as a mortgage consultant.