Tax Deductions for Expenses Paid for Children Not Claimed as Dependents

To claim the childcare credit, you must have a dependent.

To claim the childcare credit, you must have a dependent.

There are certain expenses the IRS allows you to take even though your son or daughter is technically a non-dependent child as far as the IRS is concerned.

Tip

While a non-custodial parent can't claim a deduction for child support or daycare expenses, he can deduct the interest if paying off his child's student loans.

Childcare Claims

Under most circumstances, the custodial parent claims a child as a dependent on her tax return. If you’re not your child’s custodial parent, you are more limited in the types of deductions you can take for your offspring. Even if custody is shared, the child usually lives with one parent more than the other, and the residence test is the IRS qualifier. The IRS doesn’t recognize joint custody when it comes to filing tax returns. The non-custodial parent cannot claim child support or daycare expenses.

Non-Dependent Claims Exceptions

If you are paying off your child’s student loans, even if you do not claim the child as a dependent, you can deduct the interest paid. The loan must have been taken out when the child was still a dependent to qualify, and income limits apply. For single filers, the income limit is $80,000, and the student loan interest deduction limit is $2,500. If your medical expenses and those you paid for your child exceed 7.5 percent of your gross income, you may deduct them.

If you host a foreign exchange student, you can claim him on your taxes. Even though such young people are not your dependents, the IRS permits you to receive a monthly tax credit up to a $50 limit for hosting a foreign exchange student. You must have a formal agreement with an organization whose primary purpose is providing educational opportunities for students. The exchange student must go to school full time, and this person cannot be a relative.

Non-Dependent Child Claims 2018

The Tax Cuts and Jobs Act, signed into law by President Trump on December 22, 2017, eliminates the dependency exemption until 2026. It is still not clear whether the IRS will permit any type of release of a child care credit to a non-custodial parent, as per the law in previous years.

Non-Dependent Child Claims 2017

For 2017, if the parents are divorced or legally separated, lived apart for the previous six months of the year whether married or not and the child received more than half of her support for the year from the parents and is in the custody of one or both parents for more than six months of the year, the custodial parent may fill out Form 8332, the Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. This allows the non-custodial parent to claim an exemption for the child as well as the childcare credit. It does not permit claiming of the earned income credit by the non-custodial parent.

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A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.

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