Child Tax Credit for non dependent child


S

SMF

Divorced couple with child. Mother has custody, father has
child two nights a week. Mother earns $40,000 and gets
$8000 in child support. Father gets dependency deduction as
per divorce agreement. Mother appears to qualify as Head of
Household. 2005 had a change allowing the credit for
children who are not dependent. It seems that if the child
lives with the mom for over half the year she would get the
$1000 credit. Am I reading this correctly?
 
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A

A.G. Kalman

SMF said:
Divorced couple with child. Mother has custody, father has
child two nights a week. Mother earns $40,000 and gets
$8000 in child support. Father gets dependency deduction as
per divorce agreement. Mother appears to qualify as Head of
Household. 2005 had a change allowing the credit for
children who are not dependent. It seems that if the child
lives with the mom for over half the year she would get the
$1000 credit. Am I reading this correctly?
You are not reading all the rules. In order to claim the CTC
you must also claim the dependency exemption. Normally to
claim the CTC the child must also live with you for more than
half the year. However, the code contains an exception for
children of divorced or separated parents as well as kidnapped
children.
 
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P

Phil Marti

SMF said:
Divorced couple with child. Mother has custody, father has
child two nights a week. Mother earns $40,000 and gets
$8000 in child support. Father gets dependency deduction as
per divorce agreement. Mother appears to qualify as Head of
Household. 2005 had a change allowing the credit for
children who are not dependent.
You've misinterpreted something. Nothing changed in 2005
for this couple. Father continues to get the dependency
exemption and the child tax credit. Mother is Head of
Household and eligible for child care credit. Child is
qualifying child of mother for EIC.
 
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T

tim

A.G. Kalman said:
SMF wrote:
The divorce decree is irrelevant unless it conforms to the
requirements of Form 8332. The mother gets the exemption and
the credit unless she releases it to the father in writing.

Tim
 
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R

rooth

Here is what RIA says about this topic.
Hope it helps.

Federal Tax Coordinator 2d
A-3856. Impact of custodial parent's exemption release on
other tax matters.

A release of the dependency exemption by a custodial parent
( A-3851) applies for purposes of determining whether a
child meets the definition of a "qualifying child" (
A-3605.2). Therefore, the release will also apply for the
child tax credit ( A-4053). 24 24. Conf Rept No. 108-696 (PL
108-311) p. 61.

However, the release won't apply for purposes of the earned
income credit ( A-4210), the child and dependent care credit
( A-4314), and head-of-household filing status ( A-1405).
The definition of "qualifying child" for those purposes is
made without regard to the release provision. 25

25. Conf Rept No. 108-696 (PL 108-311) p. 61.
Thus, when a custodial parent is determining whether to
release his claim to a child's dependency exemption (see
A-3851 ), the parent should take into consideration the
following factors regarding "side effects" the release does
or doesn't cause to occur (the treatment described below
also applies where a noncustodial spouse claimed the
exemption under a "qualified pre-'85 instrument," see
A-3815 ):

(1) Where the custodial parent requires the child's
exemption to qualify for the head-of-household filing
status, that filing status will still be available if the
exemption is released, 26 see A-1405.

(2) Where the custodial parent requires the child's
exemption to qualify as a married individual living apart
from a spouse (treated as unmarried), that status will still
be available if the exemption is released, 27 . see
A-1613.

(3) Where the custodial parent seeks to have the child
treated as a qualifying child for purposes of the earned
income credit, that status will still be available if the
exemption is released. 28 (In this case, the status will be
available for both parents.) See A-4210.

(4) Where the custodial parent seeks to claim the child and
dependent care credit for qualifying expenses incurred for
the child, the credit will still be available if the
exemption is released. For this credit, custody is
required-not the exemption. 29 See A-4314.

(5) Where the custodial parent seeks to claim the Hope
scholarship or Lifetime Learning credit for the child, these
credits won't be available if the exemption is released.
These credits are only available to the parent to whom the
exemption is allowed. 30 See A-4511.

(6) Where the custodial parent seeks to claim the child tax
credit for the child, the credit won't be available if the
exemption is released. This credit is only available to the
parent to whom the exemption is allowed. 31 See A-4053.

(7) Where the custodial parent seeks to qualify for the
savings bond interest exclusion for qualifying higher
education expenses incurred for the child, the exclusion
won't be available if the exemption is released. This
exclusion is only available to the parent to whom the
exemption is allowed. 32 See J-3058.

(8) Where the custodial parent seeks to claim a medical
expense deduction for medical expenses incurred for the
child, the deduction will still be available if the
exemption is released. (Each parent can include medical
costs incurred for the child in computing his or her medical
expense deductions.) 33 See K-2302.

26. Code Sec. 2(b)(1)(A)(i); Code Sec. 2(b)(1)(A)(i) before amend by
Sec. 202(a), PL 108-311, 10/4/2004.
27. Code Sec. 7703(b)(1); Code Sec. 7703(b)(1) before amend by Sec.
207(26)(B), PL 108-311, 10/4/2004.
28. Code Sec. 32(c)(3)(A); Code Sec. 32(c)(3)(B) before amend by Sec.
205(a), PL 108-311, 10/4/2004.
29. Code Sec. 21(e)(5); Code Sec. 21(e)(5) before amend by Sec.
207(2)(A), PL 108-311, 10/4/2004.
30. Code Sec. 25A(f)(1)(A)(iii) .
31. Code Sec. 24(c)(1) Code Sec. 24(c)(1)(A) before amend by Sec.
204(a), PL 108-311, 10/4/2004.
32. Code Sec. 135(c)(2)(A)(iii) .
33. Code Sec. 213(d)(5) .

Document Title: A-3856 Impact of custodial parent's
exemption release on other tax matters. Checkpoint Source:
Analysis (FTC)

Copyright 2006 RIA. All rights reserved.

rooth
 
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