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Income tax considerations associated with children in a family law case

Child support is income tax neutral (payments are not deductible by the parent making them or includible by the parent receiving them). There are, however, many other income tax considerations associated with dependent children in family law cases, including (1) filing status, (2) the earned income credit, (3) dependency exemptions, and (4) the child tax credit. Parents with whom dependent children spend more than one-half of their time are entitled for file as “head of household,” a more favorable filing status, and may be eligible for an earned income credit depending on their income and number of children living with them; these benefits are dictated by the law and cannot be changed. Dependency exemptions, on the other hand, can be allocated by agreement or court order; parents paying child support are often given the right to claim some or all of the children as dependents, thus reducing their taxable income, and possibly entitling them for to a child tax credit for any child who is under 17 years old.

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