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Remarriage with Children: Income Tax Considerations

Alimony payments:

  • Usually must be included in the gross income of the recipient
  • Can be deducted by the payer (if all requirements are met)
  • The divorce agreement may designate alimony as nontaxable and nondeductible
Child support payments:

  • Ordinarily considered nontaxable income of the recipient
  • Are not deductible by the payer
Dependency exemptions:

  • Ordinarily, the custodial parent is entitled to claim the exemption, regardless of who pays child support
  • The noncustodial parent can claim the exemption if (1) the custodial parent agrees in writing (IRS form 8332 should be completed and attached to the noncustodial parent's return) or (2) a pre-1985 divorce decree or separation agreement grants the exemption to the noncustodial parent and the noncustodial parent provides at least $600 in child support for the year
Medical expenses deduction:

  • Custody of the child isn't required
  • Claiming the child as a dependent isn't required (although you must be eligible to claim the child as a dependent)
  • Medical expenses are only deductible as an itemized deduction on Schedule A, Form 1040, to the extent they exceed 7.5% of adjusted gross income (AGI) on the tax return
1 Child and dependent care credit:

  • Can only be claimed by the custodial parent
  • Must be for child-care expenses incurred so you can work
  • Can claim, if qualified, even if you're not claiming the child as a dependent because you release the right to claim the child to the noncustodial parent
Child (and additional child) tax credit:

  • Can claim, if qualified, for a child you claim as a dependent
  • Custody of the child isn't required
Education tax credits:

  • You must be claiming the child as a dependent
  • You must have paid qualified tuition and/or related expenses

1 Beginning in 2013, the 7.5% AGI threshold for medical expenses will increase to 10%, unless you or your spouse have reached age 65.

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