If you are divorced, you might have to rethink many issues related to taxes before the month of April. You must know what the treatment of dependents by the federal government is. After all, you have to pay lesser taxes if you have more number of dependents with you. You can avail an exemption from the Internal Revenue Service if you are the custodial parent and have claimed the child who is a minor, on the income tax return. You should let the qualified tax professionals of the Tax Associates Company in Bronx, NY help you out with the same.
But, sometimes disputes may arise regarding which parent can claim the dependents for tax exemption. It becomes integral to resolve the legal requirements for the issue to budge the exemption to your preference.
What do you have to keep at stake when you claim dependents?
If you are a divorced taxpayer, you have to keep a great deal of things at stake for claiming dependents to get tax exemption. When you claim the qualifying child, you get a deduction of $3,950 for each child from your AGI (adjusted gross income) (2014). You do not get any unimportant tax break, particularly when there is a question of multiple children.
However, there is a trying factor. You can claim one dependent child only once, as per the federal regulations. It means that you can reap the rewards for claiming the dependent. The other parent does not get any financial rewards, despite providing any child support.
Which parent can legally make the claim?
In the past years, it was fairly simple to claim dependent children. The parent, with whom the child lived, would get to file the claim. But, since the divorce conditions have evolved, like long-term visits in vacations and joint custody, it has become more complicated to file the claim.
Typically, divorce filings are the first thing to research. If your divorce clearly states the custodial parent, meaning you have primary custody of the dependent child, then you are legally entitled to file the claim for any child as dependent on your taxes if you pass the qualifying child tests. You should clarify all your doubts with these qualified tax preparers in Bronx, NY..
Qualifying child tests
These tax preparers in Bronx, NY will also tell you that it is mandatory to clear five tests conducted by the IRS, which validate your application for the claim.
Relationship: The child, who is to be claimed as dependent, must be your daughter, son, descendent, foster child, or your sister, brother, step-sibling, or must be in a relationship of extended descendent (for instance, nephew).
Residency: The dependent child must have resided with the claiming parent for more than half the year.
Age:The dependent child must be under the age of 19 years and also younger than the claiming person, or must be under the age of 24 years, a full time regular student, and younger than the claiming person in 2014. You can also meet this requirement if the dependent child was totally and permanently disabled the previous year, despite the age.
Support:The dependent child has not imparted more than half his own maintenance.
Joint filing: The dependent child is not a joint taxpayer in 2014. For example, the child might have got married the previous year and plans to report a joint income tax return with the spouse.
The above mentioned tests are the qualifying relative tests, which guide the divorcees while claiming a dependent child on taxes. However, in some cases, the delineation is unclear, particularly where the case is of shared custody.
The case of joint custody
In some cases, the divorced parents share 50-50 custody of the child. In such situations, there is some trouble since there are some scenarios, when there is no proof of determining which parent is allowed to claim the child on taxes once the divorce takes place. Despite the arrangement of divorce custody (i.e. joint custody or primary custody), one parent can claim the dependent each year.
When you are under the arrangement of joint custody
According to the tax preparers in Bronx NY, there are no ideal solutions for everyone involved in joint custody. But, you have options while claiming dependent children for taxes. You can look up to the following solutions:
Alternate years: If you have got the arrangement of joint custody, you and your ex-partner can file the claim in alternate years. This system ensures that both the parents are entitled to equivalent financial benefits of the exemption.
When there are many kids: When you have multiple kids to claim, you might get confused to keep a trail of which parent has claimed which dependent child every year. You can divide the children among yourselves. For instance, if you have four children with your ex-spouse, you can file the claim for same two kids every year to avoid the confusion.
The tax professionals at the Tax Associates state that one among the both parents, who is waiving off his right to file the claim for the children has to put his signature on form 8332, to release the exemption to the other parent.
Similarly, if you are not under the arrangement of joint custody, the parent who has the primary custody may surrender his exemption to the other parent by putting his signature on form 8332 at his discretion. If you have signed this form, you will have to attach it to the tax returns of 2014 for finishing the procedure of claiming children.
The tax preparers in Bronx NY emphasize the fact that the IRS heavily scrutinizes the exemptions like tax deductions and tax breaks. You must avoid an audit of your taxes. In case you have invited this trouble, you must keep the supporting documents organized and ready to support your case. You can also let the qualified tax professionals of the Tax Associates handle the matter and deal with the Internal Revenue Service.
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