What are the financial benefits of the child dependent exemption?

The ability to claim the dependent child exemption can be a significant advantage for a parent.  It’s important that this exemption be consciously planned for as part of the divorce process.  Clearly state in your divorce decree which parent has the right to take the exemption during the year(s) of separation, the year of divorce, and the subsequent years.

If you are able to claim your child as a “qualifying child” for the dependency exemption, you may be eligible for the following tax benefits.

• Dependent exemption deduction
• Child tax credit
• Child and dependent care credit
• Education credit or education expense deductions
• Earned Income credit (EIC)

Some of these credits phase out at higher income levels.