Kid Custody Agreement and Taxes
byon 07-03-2012 at 12:35 AM (152 Views)
"A child custody agreement can have critical implications on your tax filing and your taxes overall. This matter should be addressed with your attorney or with your accountant while you are going by way of the process of negotiating or litigating kid custody or a divorce agreement. Waiting until right after you have finalized a child custody agreement to investigate the tax impact is not adviseable.
State law on child custody does not dictate who gets the tax deductions. If your child custody agreement is entirely silent on this issue, the parent with primary residential or sole custody will have all of the tax rewards obtainable by means of the children. That party will be in a position to claim the children as deductions, and so forth. This can be a considerable concern. There are parents who simply assume that if they are paying thousands of dollars per year in assistance, they will be in a position to take the children as deductions. Not so. This is extremely important when you take into account that all youngster support payments are not tax deductible to the payor and they are not taxable to the recipient parent.
Thus, when negotiating your youngster cusody agreement, you must address the concern of how custody will be structured and who will recieve the tax rewards. This negotiation should be a part of an general financial scheme that encompasses a consideration of all issues, such as youngster custody, youngster assistance, home, alimony, and tax impact.
The potential to claim head of household instead of married filing separate or even filing single can be incredibly important to your general tax scheme. You can claim head of household if you have your youngsters for more than 50% of the time. Therefore, a head of household tax filing ought to be a part of the general negiating outline in a divorce or separation circumstance. A child custody agreement that is silent on this concern is really not a nicely negotiated or written agreement.
Your kid custody agreement can address this matter in a quantity of approaches. If your child custody agreement supplies for joint shared custody, it must state who has the youngsters for 50% of the time. If you have two kids, you can divide that up so that every single parent has the possibility of fiing for head of household. If you simply have joint custody and a single parent has residential custody, you can nonetheless provide a head of household deduction to the other parent by wording the agreement in a way that allows for that filing.
There are other tax rewards accessible to parents that have to be deemed when negotiating a child custody agreement. Many or most of those tax benefits are variable based upon your revenue level ad whether or not or not you can claim the youngster or young children as deductions. If you are truly thinking by way of your kid custody agreement, you will negotiate all of these benefits. The objective should be to maximize all offered benefits for both parties, thereby delivering an general hugely advantageous tax influence for your
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