Hi everyone. With tax season approaching, I have a question that I have not found a clear answer to online (actually, I have found conflicting answers).
My partner and I had our first child in February 2019. We are not married. She stays at home with our child and works occasionally, earning less than $10k gross with random promotional jobs. I have a steady full-time job, making around $70k a year. We live in a single-family house that I own and pay the mortgage for. I cover most of the bills for the house, while she contributes to the gas and electricity bills.
I am curious, in this scenario, who would likely get the biggest tax return by claiming our child?
I should add one more thing. The calculations would be severely disrupted if the small Tzimiscekind had not been insured in 2015.
If you choose not to insure your dependant, you will be penalized with a flat fee or two percent of your income over the filing level, whichever is higher. If so, claiming the child on behalf of the 70K earner might result in a “shared responsibility payment” of roughly $1000. That may, I guess, turn the tables.
In my experience as a child, the parent who has the child full-time or for the bulk of the time, with a backstory explaining why. However, in my parents’ case, it began because my mother raised us full-time while the sperm donor visited us every other weekend and earned more money than mom. Later, however, things became more apparent when the donor sexually and physically abused us children—many of which my mother was unaware of when she passed away and which are only now becoming apparent because I want to go through therapy and heal from my past in order to be a stronger person for my daughter—and Additionally, I need to work through some mental abuse from my mother in order to be a better mental and emotional parent to my child. As a result, the donor lost all physical rights (i.e., visitation rights) and had very little legal protection. His mother had to notify him of appointments and diagnoses, but she could only do so after everything was finalized so he couldn’t just show up without warning. However, some family members and friends who have spoken up in more recent years have said that they were told it depended on who made more or less. Others have said it depended solely on who had the child the majority of the time. Still others have said it depends on a combination of the two. A few have said that in their cases, it depends on who pays child support, with the person paying having the right to claim the child to ensure they have the money to make payments at least once a year. If that was a factor when my sisters and I were under 18,and prior to mom’s passing, I would presume the person who had the most children and did not pay child support so she could afford to take care of us… However, I’m discovering that every family is unique and that a lot relies on the terms of the divorce, whether the courts are involved in determining where the kids will live, how much will be paid for them, and when.
In this circumstance, it would probably be more advantageous for you, the parent with the greater income, to claim the child as a dependant on your taxes. But since tax regulations differ depending on things like support and custody agreements, it’s best to speak with a tax expert for specific guidance.
Generally, the parent with the higher income gets a bigger tax benefit from claiming the child. In your case, that’s you (making 70k). So you’d likely get a bigger return by claiming your child.
But taxes can be tricky, so best to check with a tax pro to make sure for your situation. They can give you the final answer!