Ctc ?

[BOB W]

Is there ever a situation where a qualifying child of mother can take the CTC when a separation agreement gives the dependency to the father for this year and skips every other year for his tax return? 8901 seems to allow it. Father provided no support according to Mother...???? Still in court on other issues. Mother lived alone for entire year.

[Koss]

Form 8901

The prevailing interpretation of the law is that Form 8901 cannot be used for this purpose.

I'm not going to try to cite specific code sections. But almost everyone agrees that the Child Tax Credit is "bound" to the dependent exemption. If the custodial parent has released the exemption to the noncustodial parent, using Form 8332 or a similar instrument, then the Child Tax Credit can only be claimed by the noncustodial parent.

Form 8901 is meant to be used by a taxpayer who is eligible to claim the Child Tax Credit for their qualifying child, but cannot claim the child as a dependent because the taxpayer himself is a dependent of someone else.

That particular secnario is pretty far-fetched. I still think that this bizarre possibility is the result of genuine typographical errors in the text of the law. I am referring, of course, to the UDC provisions of WFTRA.

Before UDC, you couldn't claim the CTC unless you were also eligible to claim the dependent exemption. That requirement was removed, and its absence has contributed to a lot of the problems we have encountered in interpreting UDC.

What didn't change was the basic rules for children of divorced and separated parents.

[BOB W]

Thanks Koss. Without the 8901 I will have problems claiming Dependent Child Care Credit that the wife paid, won't I?

[Koss]

Child Care Credit?

Your original post says "mother lived alone entire year."

So the child wasn't living with her?

[BOB W]

I'm sorry, I should have said that she did not live with her husband for the entire year, just her 3 children.

[BP.]

I'm sorry, I should have said that she did not live with her husband for the entire year, just her 3 children.

Mom, as custodial parent, can claim credit for child care expenses.

[BOB W]

Mom, as custodial parent, can claim credit for child care expenses.

Even if not claiming the child as a dependent?

[Koss]

Child Care Credit

Yes.

Same as EIC and Head of Household.

These three benefits are not "bound" to the dependent exemption. They hinge on whether the child actually lives with you (plus the other applicable criteria).

Indeed, these three benefits cannot be released to the noncustodial parent, and the tax code does not recognize any court order that purports to allocate them to the noncustodial parent.

Your client should have no problem. The one that causes confusion is when the noncustodial parent is actually paying for the child care. In that case, he can claim the dependent exemption and the CTC, but not the child care credit.

There is an argument to the effect that he has "paid it on behalf of" the custodial parent, and that she can actually take the credit even though he paid it. But I don't know how much support there is for that position.

The real underlying question is why is the kid in day care to begin with? The credit is meant to account for the need for child care while the custodial parent is working. The noncustodial parent is not entitled to the credit because he doesn't have to find someone to take care of the kid while he goes to work. The kid doesn't live with him.

This section of the law actually makes sense...

[BOB W]

Koss, thanks for your insights..............although not what I wanted to hear.