Parental decision-making, parenting time, and child support are among the key considerations you expect when addressing Illinois child custody. Taxes are probably not top of mind when working out these details. Illinois uses the term allocation of parental responsibilities to refer to custody, so you are focusing on how co-parents determine the important issues involved with raising the child.
However, a key issue that is closely tied to child custody is the residential arrangement, and this is where taxes enter the picture. Parents may share in decision making, but the child will probably primarily reside with one; the other pays child support.
Plus, tax laws take into account the general investment parents make, offering exemptions and favorable tax treatment in certain situations. It is important to consult with a Chicago child custody attorney about how tax laws affect your circumstances, but some quick facts are helpful.
First, some clarity on terminology is important.
- A tax exemption is the exclusion of income when assessing what income taxes a person owes.
- When the government assesses your tax and subtracts qualifying amounts, you benefit from a tax credit.
- A tax deduction is a fixed amount that you are allowed to subtract from your taxable income when filing your return.
For most practical purposes, all personal tax exemptions were eliminated by the Tax Cuts and Jobs Act (TCJA) a few years ago.
Other Beneficial Tax Treatment
Fortunately, the TCJA also preserved certain tax credits and deductions, while creating new ones that benefit families. If you are a parent of a qualifying child, you may take advantage of various options:
- Filing as head-of-household enables you to subtract a larger standard deduction than if you were filing as a single person. You must have one qualifying child and cannot be married.
- The child tax credit serves to reduce your tax, and single parents may qualify if they meet the criteria on earnings.
- If you are eligible for the earned income tax credit, you can also reduce your tax liability. The key is meeting the strict rules on qualifying children and income thresholds.
- There are some tax advantages and credits for education, including a way to pay for education through tax-free dollars.
How Child Custody Affects Taxes
The link between the two concepts is time: When one parent is with the child for a larger percentage of the day, week, or month, there are obvious implications for costs. When custody and visitation create a 50-50 custody arrangement, expenses are equal for each party. The details for taxes are case specific.
Learn More by Consulting With a Chicago Child Custody Attorney
Laws on tax exemptions, credits, and other benefits for families are complicated and subject to frequent changes. Because they can affect your reporting and how you file, retaining knowledgeable legal counsel is essential. To learn more, please contact Michael C. Craven to set up a free consultation. You can call (312) 621-5234 to speak to a Chicago child custody attorney who will review your circumstances and provide additional details.
The post Child Custody and Tax Exemptions first appeared on Divorce Attorney in Chicago.