My husband and I are working with a mediator to finalize our divorce settlement. We're close, but the last time we met my husband said he wanted to revise the section on tax breaks and exemptions for children. I'm not sure why he insists on this last minute change and the mediator couldn't get him to explain this, but he insists.
At first I was inclined to just give in and let him have the tax credits, but now I wonder why he's so persistent as our 4 kids spend most of the time with me – especially in the summer because I'm a teacher and he doesn't have one Summer free. I understand that he may be eligible for this because he is paying child support, but I want to be sure I am not overlooking anything here before I agree. Do you have any idea what his sudden problem might be? Is there a reason I should insist on keeping the children on my tax return?
I am not an accountant. For more security, you should have this issue carried out by an accountant.
Historically, prior to the tax law change in 2018, divorcing parents found a way to share the dependency release that often put actual dollars back into people's pockets by increasing their refunds. As a rule, the parties agreed to share the exemptions in the case of an even number of children; in the case of an odd number, they changed as long as the dependent parent was currently dependent. Today, most divorced couples address child tax credits in agreements, and the trend is to split those credits in the same way as they did in the past for care relief.
Previously, the loan was $ 2,000 per child under the age of 17. For 2021 only, the amount was increased to between $ 3,000 and $ 3,600, depending on the ages of the children. Traditionally, the child tax credit has reduced a parent's income tax liability directly. However, under the COVID-19 Economic Act passed in March, parents can request advance payments for the child tax credit starting this month. In this case, you will receive an advance payment equal to half of the child tax credit. The other half of the credit will be offset against your income tax when you submit your tax return.
Since you didn't say how old your children are, I can't tell you the exact paycheck amount he'll imagine if you approve his sudden proposal. If all four of your children are under 6 and you agree to claim the tax credit, he'll get a check from the government for $ 7,200 pretty quickly and another $ 7,200 for his taxes when he files his tax return next year . It will take off a bit as they get older, but still be a nice payoff.
Bottom line, don't settle for less than half the credits.
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