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Child custody and tax tips for Florida parents

Once parents in Florida have gone through a divorce and have determined issues of child custody, they often believe that the party who retains the bulk of parenting time will also receive all of the tax advantages that come with parenthood. This, however, is not necessarily true. It is possible for non-custodial parents in Florida to also share in the tax benefits associated with having a child.

Non-custodial parents can make use of the dependency exemption credit, which was just over $4,000 in 2016. In order to claim one's child as a dependent, the custodial parent must formally relinquish that right by way of IRS Form 8332. This is a step that is done on a yearly basis, which allows divorced parents to swap out their ability to claim a child on their tax return.

In addition, a non-custodial parent can also make use of tuition deductions, child tax credits and student loan interest deductions. In all, those tax advantages can add up, and can significantly reduce the amount of taxes owed in a given calendar year. One benefit that cannot be transferred from the custodial parent to the non-custodial parent is the right to claim head-of-household as one's filing status.

For many in Florida, this is an issue that should be brought up during divorce and child custody negotiations. It is possible for a couple to decide in advance how to share the tax advantages that come with parenthood. Having those decisions in writing as part of the divorce agreement can make it easier for both parents to plan their tax scenarios out ahead of time.

Source: marketwatch.com, "After the divorce: Which parent gets child-related tax breaks?", Bill Bischoff, May 13, 2016

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