Dependent Care Credit

[Redneck]

Divorced dad pays child care for two children, directly to child care provider, has receipt.
Not custodial parent.
Cannot claim children as dependent.
Is he eligible for the Dependent Care Credit.
Thanks
Red

[Jesse]

If the child did not live with Dad for more than half of the year he is out of luck. Only the custodial parent can claim child and dependent care expenses.

[taxea]

Divorced dad pays child care for two children, directly to child care provider, has receipt.
Not custodial parent.
Cannot claim children as dependent.
Is he eligible for the Dependent Care Credit.
Thanks
Red

no, sorry he isn't

[WhiteOleander]

Divorced dad pays child care for two children, directly to child care provider, has receipt.
Not custodial parent.
Cannot claim children as dependent.
Is he eligible for the Dependent Care Credit.
Thanks
Red

The point to the dependent care credit is to receive some assisstance for the cost of taking care of the dependent while the taxpayer earns taxable income. Since the Dad is not the custodial parent, he can go to work whether the child has daycare or not. What he contributes is a form of child support and not deductible.

[Redneck]

Client SOL

Thanks Jess,Tax,White for your answers. I had the same answer but wanted confirmation. Always second guessing myself. Red

[taxea]

Thanks Jess,Tax,White for your answers. I had the same answer but wanted confirmation. Always second guessing myself. Red

Red your first decision is usually the right one...too much thought muddies the waters.

[JG EA]

The point to the dependent care credit is to receive some assisstance for the cost of taking care of the dependent while the taxpayer earns taxable income. Since the Dad is not the custodial parent, he can go to work whether the child has daycare or not. What he contributes is a form of child support and not deductible.

Good answer. I like it - reasonable. Maybe there is some other reasonableness lurking in the tax code some where.

[taxmom34]

just a thought here, and i'm not sure if it's right or not, but: would he qualify to claim the child as his dependent, does he pay enough child support (including the day care payments), and if yes, why not pay spouse and she can pay the daycare herself and claim the child care credit and he claims the dependent? am i overthinking here?

[Gary2]

just a thought here, and i'm not sure if it's right or not, but: would he qualify to claim the child as his dependent, does he pay enough child support (including the day care payments), and if yes, why not pay spouse and she can pay the daycare herself and claim the child care credit and he claims the dependent? am i overthinking here?

If he and his ex meet the requirements for splitting the benefits, and if the ex agrees by signing Form 8332 (or if their divorce meets the requirements), then he could indeed claim the children as dependents. However, the base note says he can't claim them, without saying why he can't - perhaps the ex won't agree, or the divorce agreement doesn't allow it.

As for whether the ex can claim the dependent care credit, assuming the ex has earned income or otherwise meets the requirements (along with ex's current spouse, if any), then the main question is whether the ex is allowed to claim the expenses paid directly by the non-custodial parent to the agency. My inclination is to treat it the same as if paid directly to the ex as child support, and the ex then paid the agency. However, I don't have any citations handy to back it up.

[Davc]

just a thought here, and i'm not sure if it's right or not, but: would he qualify to claim the child as his dependent, does he pay enough child support (including the day care payments), and if yes, why not pay spouse and she can pay the daycare herself and claim the child care credit and he claims the dependent? am i overthinking here?

Child support does not count as support provided by the non custodial parent.

[oceanlovin'ea]

similar situation

Taxpayer (father) pays the private school tuition (not a deduction) and the after school care for 2 children. Divorce decree allows each parent to claim one child. So he can only deduct the after school care for one child and she can't deduct it for the child she claims because she doesn't pay it.

Makes a touchy situation for families.

Linda, EA

[okie1tax]

Dependent care

Linda, would you clarify that a little? It seems you are saying the children live with her or maybe only the one child, as he claims the day care for one.

[Gary2]

Taxpayer (father) pays the private school tuition (not a deduction) and the after school care for 2 children. Divorce decree allows each parent to claim one child. So he can only deduct the after school care for one child and she can't deduct it for the child she claims because she doesn't pay it.

Who has physical custody?

The statement of the divorce decree about allowing each parent to claim one child is totally irrelevant to the childcare credit. The childcare credit may only be taken by the custodial parent (unless someone, other than the two parents, can and does take the dependency exemption).

[oceanlovin'ea]

They have joint custody. Divorce decree says he can claim one child and she can claim one child. But he pays ALL of the costs for their private school and the aftercare for both kids. But since he can only claim one child he can only claim the after school care for the one he claims. She can't claim the after school care expenses because she doesn't pay them.

So the deduction for that child is just lost.

Linda, EA

[Davc]

Legal custody and physical custody are not the same thing. The credit (and control of the dependency) goes to the parent with greatest time of physical custody.