I wonder how much difference it makes between claiming 1 child instead of 2 on taxes?

Question

I'm in a bind for money, and my son's dad said he would give me some money to help me if I would agree to let him claim him on his taxes. I usually make around 26,000-29000, but last year they held out money for student loans I was behind on, and I still owe them, so I'm sure they'll do it again this year. I could still claim 1 other child, but I wonder how much of a difference it will make? I usually get the earned income credit also. Anyone have any suggestions?

Answer 1

You can waive your child's exemption and child tax credit to the noncustodial parent. The exemption and the child tax credit go together, if you waive the exemption you cannot get the child tax credit or additional child tax credit.

You sign Form 8332 indicating which child and which year. He attaches Form 8332 to his tax return. You cannot waive the Earned Income Credit to the noncustodial parent, you get that even if you don't claim your children as dependents.

Assuming no other deductions or credits, with an income of $29,000, if you claim both your children as dependents on your tax return, your refund should be about $2,750 plus your withholding.

If you waive the exemption and child tax credit to the other parent for one child, your refund drops to about $1,250 plus your withholding.

So the cost to you is $1,500 for waiving one child's exemption. If the other parent claims the child, and he owes taxes, say at the 15% rate, he will reduce his taxes by about $1,500.

So I suggest that he pay you at least $1,500 in order to be able to claim one child on his tax return as a dependent. If he is in the 25% tax bracket, he should pay you at least $1,850. But you better make very sure he is not trying to claim the EIC, that is illegal and will cause you problems.

Answer 2

Actually Gary, in certain cases, and with the information given it looks like this may be one of them, divorced and seperated parents may alocate the exemptions with the noncustodial parent taking the dependant expemtion and child tax credit and the custodial parent getting to claim the child for EIC (if they qualify). There is no way to know for sure unless one knew all the details though. Figure out how much your tax liability would be both ways and then see if you should allow the childs father to claim him, who knows, keeping the child might get you more money than the father would give you for the right to the exeption.

Answer 3

ok, the disclaimer: i'm not a tax professional, yet then you definately get what you pay for while it incorporates suggestion. you could play it risk-free and declare 0, then replace it to a 2 next year. Or, you could study the numerous factors on the decrease back of the W-4, fill out that worksheet, and then confirm what to do. ============ I merely appeared on the IRS tax tables for a form 1040EZ from this previous April 15. Line a million - enter your earnings. $70,000 Line 2 - Taxable interest. $-0- Line 3 - Unemployment reimbursement $-0- Line 4 - upload lines a million,2,3. it extremely is "adjusted gross earnings" $70,000 Line 5 - If no person can declare you as a based, enter $17,500. it extremely is the time-honored deduction, plus the two deductions for you and your spouse. Line 6 - Subtract Line 5 from Line 4. it extremely is "taxable earnings" $fifty two,500. Line 7 - Tax withheld - TBD (relies upon on your W-4 form) Line 8 - Earned earnings credit and wrestle Pay $0 Line 9 - upload lines 7 & 8 Line 10 - Tax. seem up $fifty two,500 in the table in the e book, and locate the entire tax $7,096 (it extremely is final year's. Congress would replace it this year) in case you gets a commission two times a month (24 exams a year), and $296 according to verify replaced into withheld for Federal earnings Tax, then you definately're all sq.. it extremely is Federal earnings Tax purely, not consisting of Social risk-free practices, Medicare, State Tax, 401K, or the different deductions.

Answer 4

You are assisting your son's Dad in committing fraud. Your son's Dad is not entitled to the claim. By giving away one exeption that is $3,400 for one exemption and it will affect your Earned Income Credit as well.

Answer 5

You'd lose the value of the exemption on your return. In your situation that would raise your tax bill by $510 ($3,400 * 15% marginal tax rate).

It would not affect your eligibility for the EIC, Child Tax Credit, or the Additional Child Tax Credit. You would remain eligible for those. (Make SURE that he understands that YOU will be claiming those!)