Single, married or separated, as a parent, your top priority is to provide for your children and ensure that they have the most secure future possible. Here’s what you need to know about understanding Child Tax Credits amid divorce.
Child tax credit is important if you have dependent children in your family. If you are currently going through divorce, or have already dissolved your marriage, you could be left with even more questions.
Here’s what you need to know.
What are the Child Tax Credits?
Child Tax Credits are a federal tax credit that provides financial support to families with children.
As part of a 2021 coronavirus relief package, significant modifications were made to the country’s tax legislation. Many U.S. residents consequently earned additional Child Tax Credit relief, which was given out as monthly payments of up to 300 dollars per child. The IRS paid a portion of the Child Tax Credit in advance for a portion of 2021. Both in 2022 and 2023, those advance payments were not scheduled to be made available.
The Child Tax Credit was reduced to 2,000 dollars per eligible child for tax year 2022, and the 300 dollars advance monthly installments were no longer available.
The Child Tax Credit is scheduled to stay at 2,000 dollars per eligible child for tax year 2023, but without any upfront monthly payments.
What if I am Separated or Divorced?
If you are divorced, which parent gets the tax credits? When the terms of the divorce clearly identify a custodial parent — the parent who has primary custody of the child — that parent is legally entitled to claim the child as a dependent and receive any associated assistance.
As per the conditions of the credit, generally it is not possible to split the payment and therefore only one parent can claim it each year.
There is a special rule for divorced or separated parents or parents who live apart for the last 6 months of the calendar year. If the requirements of the special rule are satisfied, then the child is treated as the qualifying child of the noncustodial parent for purposes of the child tax credit/credit for other dependents, while the custodial parent may claim the dependent care credit and EITC, under the general rules.
For more information, see ‘Applying the tiebreaker rules to divorced or separated parents (or parents who live apart)’ in Pub. 501 and ‘Special rule for divorced or separated parents (or parents who live apart)’ in Publication 596. See Publication 501, Dependents, Standard Deduction, and Filing Information, for more information.
If you mistakenly claimed the child as your dependent, you should unenroll from receiving the monthly payments. Otherwise, you may have to pay that money back next year.
Are All Parents Eligible for Receiving Child Tax Credit?
No. In order to be eligible for the Child Tax Credit, parents must file taxes and meet certain residency and income standards.
You can claim the Child Tax Credit for each qualifying child who has a Social Security number that is valid for employment in the United States.
To be a qualifying child for the 2022/3 tax year, your dependent generally must:
- Be under age 17 at the end of the year
- Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece or nephew)
- Provide no more than half of their own financial support during the year
- Have lived with you for more than half the year
- Be properly claimed as your dependent on your tax return
- Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid
- Have been a U.S. citizen, U.S. national or U.S. resident alien
You can claim the Child Tax Credit by entering your children and other dependents on Form 1040, U.S. Individual Income Tax Return, and attaching a completed Schedule 8812, Credits for Qualifying Children and Other Dependents.
Still Disputing Tax Credits with Your Ex?
If you are still unsure of who the main custodial parent is, or you have no solid parentage, parenting time or allocation of parental responsibilities schedules in place, generally, the custodial parent is the parent who has physical custody of the child for the greater portion of the calendar year. If there are still disputes over who should get the money, a parent could file with the courts.
Navigating the system can be complex and overwhelming. It’s essential you understand your rights and make an accurate claim. If you do decide to take it to court or if you need advice on your situation, it’s best to speak with the experienced family law attorneys at Masters Law Group. We can help you understand the issues that will affect you, including your ability to claim children as dependents and receive tax credits.