Tax question. Re: dependent

[Orange&White]

My ex and I usually switch off on claiming our son as a dependent. She does 3 years, and I do one. However, this year, she and her husband will be claiming 4 kids total on their taxes (my son, two that her husband brought in and one of their own).

Is there a diminishing return when it comes to claiming kids?

She and I get along very well and I'm sure we would both be interested in maximizing our return by having the appropriate person claim my son.

I know that for me to add him to my return, it increases my return by (at least) $1700. Splitting that in half would (obviously) be $850 for each of us. Do you think she makes that much by claiming him as one of 4 kids?

I know it sounds confusing, but does anyone have any thoughts on this?

 

[EuroHorn]

Doesn't your divorce decree tell you who can claim who?

 

[Orange&White]

In nine years neither of us has ever looked at our divorce decree to guide our decisions. We decide for ourselves what is the best course of action. It just turns out that we are not tax professionals.

My question wasn't if I should "get" to claim my son. I was asking if it would work out better financially for BOTH of us if I claimed my son, since she and her husband will already be claiming three other kids.

 

[Meursault]

The exemption for dependents does not decrease; unless they make over $234,600 filing jointly, at which point a phaseout begins.

However, you may benefit more from the Child Tax Credit if they jointly make over $110k and you make less than $75k singly. And remember that the tax credit reduces the actual tax that you owe, not just AGI.

Please, correct me if I'm wrong.

 

[mishatx]

The amount of benefit you get from a dependent child is based on so many things it's hard to just say yes or no to your question.

There is no diminishing return to be able to claim more dependents as exemptions. In fact, each deducts 3400 from your taxable income, so more could drop you a tax bracket, making each exemption worth slightly different in tax owed. For you, that $3400 might be worth $340 in tax, but for her, it could mean $850. Or the other way around.

There is a diminishing return in child tax credits in that your tax credit is limited if your income is too high (110K married, 75K single), if you claim certain other credits, or if your total child credit exceeds your total tax.

For these reasons, it almost is easiest to answer the questions by doing each return both ways and seeing what the difference is.

 

[Big Horn]

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