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Lev
Lev, Tax Advisor
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I have a two part question. I am recently divorced and per

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I have a two part question. I am recently divorced and per the divorce papers my ex gets to claim our 5 year old daughter on our 2010 taxes and I get to claim her in 2011 and every other year. I have recently changed jobs and the new company offers a flex spending dependent child care account and I am trying to decide if I should sign up for it to cover the 12 weeks of daycare my ex and I split. My questions are, since my ex gets to claim her in 2010, does her get to claim the dependent care tax credit even though I paid for half of the expense (he doesn't use a FSA account) in 2010? If so, would it be illegal for me to use a flex spending plan to cover my half since he is claiming the child care expense on his 2010 taxes?
Submitted: 6 years ago.
Category: Tax
Expert:  Lev replied 6 years ago.

The IRS will not look into your divorce decree.

 

Under the IRS rules the custodial parent is the parent with whom the child lived for the greater part of the year. The other parent is the noncustodial parent.

The IRS will award dependency exemption to the custodial parent.

 

The custodial parent may release the claim to the noncustodial parent by signing the form 8332 - http://www.irs.gov/pub/irs-pdf/f8332.pdf - should be filed with the noncustodial parent's tax return. The non-custodial parent - you should obtain that form signed by the custodian parent for specified years.

 

Please refer to the IRS publication 504 - http://www.irs.gov/pub/irs-pdf/p504.pdf

If a child is treated as the qualifying child of the noncustodial parent under the special rule for divorced or separated parents, only the noncustodial parent can claim an exemption and the child tax credit for the child.

However, the noncustodial parent cannot claim the child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit. Only the custodial parent (or other eligible taxpayer) can claim the child as a qualifying child for these four tax benefits.

 

Thus - if you are a custodial parent (under IRS rules) - you may benefit from FSA. But if you are noncustodial parent - you may not deduct child care expenses and FSA benefits should be included into your taxable income.

 

Let me know if you need any help.

 

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