There appears to be some confusion as to who gets which tax benefits and I think an examination of the Idaho Child Support Guidelines and IRS Publication 504 might resolve these issues. There are many tax benefits to having children and very different rules as to which parent can claim those benefits. The most common benefits are:
PLEASE BE AWARE: Taxes change constantly and the Idaho Child Support Guidelines change constantly. This is not tax advice, you need to bring your child support order to your tax preparer in order to determine the proper way to file your taxes.
ONE EXAMPLE:
Your situation may be different but this is a common scenario where the Mother has the children more than 50% of the overnights, Father has less than 50% of the overnights and order states that Father pays child support and puts the children as dependents on his taxes. (This example may not fit your situation as every family is completely different, but may be helpful nonetheless)
The child tax credit is included in the pro rata dependency calculation that the ICSG uses. If Father gets to claim the dependency he claims the children for child tax credit as well. The earned income credit, head of household, and credit for child care expenses are separate, and whoever has the children for more than 50% of the overnights in the year can claim those benefits.
The guidelines address which tax benefits are included in the calculations and which are separate in the footnote to IRFLP Rule 126(H)3(footnote), which reads:
IRFLP Rule 126(H)3(footnote):
These Guidelines attempt to calculate a deduction that is accurate as of the date the chart is implemented; however, the tax laws may change and the court may deviate from these calculations upon a showing that it is not accurate in a particular case. Parties should bear in mind if they wish to contest a calculation that this chart includes tax calculations for a dependency exemption for each dependent and child tax credits, and does not include a calculation for a child care tax credit or an earned income credit. For purposes of calculation of the Idaho child support obligation, tax benefit includes both the dependency exemption benefit and the child tax credit benefit. The tax benefit includes the refundable and nonrefundable portion of the child tax credit. The child tax credit of $1,000 is not available in the year a child turns 17 or thereafter. To determine the tax benefit to a parent with a child over 17, go to the last column to the right for the number of children in the calculation, and use only the amount in that column in excess of $1,000.
Full text here: https://www.isc.idaho.gov/rules/irflp/IRFLP_Rule126-7.1.15.pdf
There is an example in the IRS publication that is informative. The IRS rules are republished in Publication 504 every year and are difficult to follow, I have included an excerpt from page 12-13 ‘example 1’ (the second example 1) as follows:
Excerpt from page 12-13 ‘example 1’ (the second example 1):
Example 1. You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Your AGI is $10,000. Your mother's AGI is $25,000. Your son's father does not live with you or your son. Under the rules for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child if he meets all the requirements to do so. Because of this, you cannot claim an exemption or the child tax credit for your son. However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit. You and your mother did not have any child care expenses or dependent care benefits, but the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. (Note: The support test does not apply for the earned income credit.) However, you agree to let your mother claim your son. This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you do not claim him as a qualifying child for the earned income credit. (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home.)
The full text of publication 504 is here: https://www.irs.gov/pub/irs-pdf/p504.pdf
It would appear that Publication 504 is saying that the tax dependency and child tax credit are Father's, if awarded the tax dependency as per the child support order, but the head of household, credit for child care expenses and earned income credit are would be the parent who had the children for more than 50% of the overnights in the year.
Form 8332 is required to be signed by the parent that is not declaring the children as a dependent.
ADDITIONALLY: There is an argument that the earned income tax credit can be income.
- Exemption, listing child as a dependent.
- Child Tax Credit
- Head of Household Filing Status
- Credit for Child and Dependent Care Expenses
- Exclusion for Dependent Care Benefits
- Earned Income Credit
PLEASE BE AWARE: Taxes change constantly and the Idaho Child Support Guidelines change constantly. This is not tax advice, you need to bring your child support order to your tax preparer in order to determine the proper way to file your taxes.
ONE EXAMPLE:
Your situation may be different but this is a common scenario where the Mother has the children more than 50% of the overnights, Father has less than 50% of the overnights and order states that Father pays child support and puts the children as dependents on his taxes. (This example may not fit your situation as every family is completely different, but may be helpful nonetheless)
The child tax credit is included in the pro rata dependency calculation that the ICSG uses. If Father gets to claim the dependency he claims the children for child tax credit as well. The earned income credit, head of household, and credit for child care expenses are separate, and whoever has the children for more than 50% of the overnights in the year can claim those benefits.
The guidelines address which tax benefits are included in the calculations and which are separate in the footnote to IRFLP Rule 126(H)3(footnote), which reads:
IRFLP Rule 126(H)3(footnote):
These Guidelines attempt to calculate a deduction that is accurate as of the date the chart is implemented; however, the tax laws may change and the court may deviate from these calculations upon a showing that it is not accurate in a particular case. Parties should bear in mind if they wish to contest a calculation that this chart includes tax calculations for a dependency exemption for each dependent and child tax credits, and does not include a calculation for a child care tax credit or an earned income credit. For purposes of calculation of the Idaho child support obligation, tax benefit includes both the dependency exemption benefit and the child tax credit benefit. The tax benefit includes the refundable and nonrefundable portion of the child tax credit. The child tax credit of $1,000 is not available in the year a child turns 17 or thereafter. To determine the tax benefit to a parent with a child over 17, go to the last column to the right for the number of children in the calculation, and use only the amount in that column in excess of $1,000.
Full text here: https://www.isc.idaho.gov/rules/irflp/IRFLP_Rule126-7.1.15.pdf
There is an example in the IRS publication that is informative. The IRS rules are republished in Publication 504 every year and are difficult to follow, I have included an excerpt from page 12-13 ‘example 1’ (the second example 1) as follows:
Excerpt from page 12-13 ‘example 1’ (the second example 1):
Example 1. You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. Your AGI is $10,000. Your mother's AGI is $25,000. Your son's father does not live with you or your son. Under the rules for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for the child if he meets all the requirements to do so. Because of this, you cannot claim an exemption or the child tax credit for your son. However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit. You and your mother did not have any child care expenses or dependent care benefits, but the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. (Note: The support test does not apply for the earned income credit.) However, you agree to let your mother claim your son. This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you do not claim him as a qualifying child for the earned income credit. (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home.)
The full text of publication 504 is here: https://www.irs.gov/pub/irs-pdf/p504.pdf
It would appear that Publication 504 is saying that the tax dependency and child tax credit are Father's, if awarded the tax dependency as per the child support order, but the head of household, credit for child care expenses and earned income credit are would be the parent who had the children for more than 50% of the overnights in the year.
Form 8332 is required to be signed by the parent that is not declaring the children as a dependent.
ADDITIONALLY: There is an argument that the earned income tax credit can be income.
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