Claiming child day care exps w/o claiming child?

[AZ-Tax]

Through an agreement my client has with his ex, my client claims his kids on the "odd" tax years. I prepared his 2007 tax return and he did claim the kids in 2007.

My client paid $2300 in child day care for one child in tax year 2008. Is he entitled to claim it and if so how do you claim it without claiming the child as an exemption?

[AuditorTurnedGood]

Not sure

about splitting the kids up with the child care $$$, but a note on the agreement to "swap" years: Most of them aren't valid with the IRS. The dependent needs to be claimed by the custodial parent unless there is a Form 8332 signed allowing the noncustodial parent to claim. TTB 3-15 goes into some detail on this.

That said, everyone does it, because divorce attorneys think it's a "fair" way of splitting the benefit of the kids. Nothing is fair in divorce.

ATG

[RitaB]

Yes, if he is the custodial parent

Through an agreement my client has with his ex, my client claims his kids on the "odd" tax years. I prepared his 2007 tax return and he did claim the kids in 2007.

My client paid $2300 in child day care for one child in tax year 2008. Is he entitled to claim it and if so how do you claim it without claiming the child as an exemption?

See TTB, p. 11-6. My software (ATX) lets you have the dependent info entered, but check a box to not claim the dependent THIS year. In reality, I've not had your situation with the Child and Dependent Care expenses, but the custodial parent gets this credit.

[Possi]

custodial parent

I have that situation with a client. The children live with the mother more than half the year, but dad gets to claim one exemption every year and trade a second child's exemption every other year.

I have my client sign the 8332 every year, to give to the father, since the children physically live with her more than half the year. She claims the child care expenses.

So, in your case, if the child doesn't actually live with dad more than half the year, then he needs that 8332 signed every year in order to claim the exemption; Also, he should not be allowed the child care expense deduction in any year that the child did not live with him more than half the year.

Is that clear as mud??

[AZ-Tax]

Updated info....

Now I come to find out that my client (the Father) is claiming 2 kids on even tax years and all 3 kids on odd tax years. The 2 kids lived with the Father 6 mos or less in 2008. So I need to have my client (the Father) sign the form 8332 for tax year 2008 as well as all future tax years?

Interesting that my tax software ProSeries allows my client to receive a "dependent care tax credit" on the 3rd kid for which my client is NOT claiming and I did NO overriding.

[Possi]

Who signs the 8332

No, the father gets the signed 8332 from the mother... if the children lived with the MOTHER for more than 6 months. He then includes that form with his tax return.

[RitaB]

I would guess

Interesting that my tax software ProSeries allows my client to receive a "dependent care tax credit" on the 3rd kid for which my client is NOT claiming and I did NO overriding.

that your software is linking the issuance of the credit to the block or cell where you have input the number of months the 3rd child lived with Dad, and you've entered 7 or more months, telling the program he's the custodial parent.

[New York Enrolled Agent]

Now I come to find out that my client (the Father) is claiming 2 kids on even tax years and all 3 kids on odd tax years. The 2 kids lived with the Father 6 mos or less in 2008. So I need to have my client (the Father) sign the form 8332 for tax year 2008 as well as all future tax years?

Interesting that my tax software ProSeries allows my client to receive a "dependent care tax credit" on the 3rd kid for which my client is NOT claiming and I did NO overriding.

Only a custodial parent can claim the dependent care credit.

IRS Notice 2006-86

If § 152(e) applies, a child may be treated as the qualifying child of two taxpayers. A noncustodial parent may claim the child as a qualifying child under § 152(e) only for purposes of the child tax credit under § 24 and the dependency deduction under § 151. However, the noncustodial parent may not claim the child as a qualifying child under § 152(e) in determining head of household filing status under § 2(b), the earned income credit under § 32, the child and dependent care credit under § 21, or the exclusion from income for dependent care assistance under § 129. Only the custodial parent (or other eligible taxpayer) may claim the child as a qualifying child for those purposes.