Legal Question in Tax Law in Indiana

Dependency Deductions

Who should have the tax dependency deduction for a child when the parents are not married or get divorced?

Asked on 1/22/02, 9:45 pm

1 Answer from Attorneys

Mary Ann Wunder Wunder & Wunder

Dependency Deductions

Regardless of the federal tax law that a custodial parent is the person presumed to have the right to claim his child as a dependent for tax purposes, the determination of whether the deduction ought to be given to the non-custodial parent is a financial one.

When the custodial parent will be the parent earning the lesser amount of income and qualify for both the earned income credit as well as being a head of household for tax rate purposes, it is unlikely that the deduction will significantly benefit the custodial parent.

When a parent earns enough money that the tax rates effectively deny the benefits of claiming exemptions, then it does ot benefit the parent claiming it either.

An analysis needs to be made in every case to determine how much it costs each parent in terms of increased taxes for having or not having the deduction before an informed and intelligent decision can be made on this issue.

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Answered on 12/31/69, 7:00 pm

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