What benefit is it to claim a dependent if you don't get anything?

Question

i don't understand. Mom and dad has a child. Mom and dad have court order saying everyother year each one claims child. Regardless of whom the child lives with. Why does one parent not get the tax break? Why have it set up this way if it serves no benefit? State of wisconsin. I thought that regardless of who lives with who the purpose of claiming a dependent means that you get the EIC or tax break? What am I missing?

but the tax accountant doesn't do it to get the maxiumum back. The whole did this child live with you all twelves months. SHouldn't it be yes since for the year the child is claimed as the dependant? Oppose to three grand back getting only seven hundred?

Answer 1

you are not missing anything, you got it right, it is for the tax break and EIC, meaning getting more back when you file taxes

Answer 2

Claiming the child as a dependent means that your taxable income is reduced (additional exemption) and, if the child is young enough you can claim the child tax credit.

The parent the child lives with for more than half the year gets to claim the EIC and possibly file as Head of Household.

Why the court decided that one parent could claim the child every other year is a question for the court or the attorneys involved in the case, it may have something to do with the amount of child support being paid.

Answer 3

Tax law allows only one exemption per person. If the parents are filing a joint return, they get one exemption per child. If they are filing separately for any reason, they still have one exemption, and can decide who can take the exemption.

Not sure what you mean by serving no benefit. The exemption will lower the taxes of the person taking it unless they don't owe anything - and if they don't, it might make them eligible for EIC, or increase their EIC if they're getting it anyway. Having a dependent, though, is not just for EIC.

In the year that the non-custodial parent claims the child as a dependent, the custodial parent can still claim the child for EIC even though they don't get the exemption that year.

Answer 4

Unless the parent makes more than $100,000, there is a benefit to claim a dependent, whether or not they are eligible for EIC. The reason why the courts set up the schedule is because BOTH parents are paying to support the child. This avoids situations whereby both are claiming the child, one based on the fact that the child lives with them and the other based on the fact that they are paying 50% support.

However, if one parent isn't paying support, or pays an amount that minimally supports the child, the parent who has physical custody can apply to the court for it to be changed.

Answer 5

The benefit is that an extra dependent on your tax return will lower your tax liability. You either owe less or get more back. A dependent can be claimed on only one tax return in any given year. By alternating years, each one gets the benefit every other year. EIC can be claimed by whoever the child lives with, whether they get to claim them on the tax return or not, but is based on income.

masterqbj, you need to get your conspiracy facts straight. If every penny you earned for the first four months of the year went to taxes, you would have covered your taxes for the year. That doesn't happen, the taxes come out in equal amounts throughout the year.

Answer 6

The following pairs of tax benefits related to a child go together:

Dependency Exemption
Child Tax Credit/Additional Child Tax Credit

and

Earned Income Credit
Head of Household Filing Status (if custodial parent is unmarried)

Only the first pair of tax benefits can alternate between divorced or separated parents. The second pair of benefits always remains with the custodial parent.

Having the dependency exemption and the child tax credit alternate between parents means about $1,500 difference in refund at most.

Answer 7

Well the person where the childs lives more than 50% of the time can still claim head of household & receive another exemption on that.

As for your understanding, that is correct. I am a CPA & have the same exact setup - it sucks.
From my understanding its setup this way to prevent double paying on the government side. yes, the government are cheap. However, it is what it is. You might want to speak to an accountant or CPA to discover some insightful tax planning tips on how to get some tax writeoffs on the year you can't claim the child.

Answer 8

It appears that you are talking about divorced or separated parents. It is that way because of the divorce decree.

Whoever gets to claim the dependent, gets the full benefits of claiming the dependent. That is the way the tax law is written.

Answer 9

The government is one big scam, some people dint know that with in four months of working you have leagally already paid the leagal requirement of taxes. why do we keep getting taxed after that is the question.