The custody of children is a major issue that needs to be resolved well before a couple actually goes for divorce. The custodial guardian gets tax benefits on the child. But then deicing upon the custodial parent and the tax benefit can be quite a complicated task. If you are one of the parents going for a divorce, here are certain things that you should keep yourself aware of.

As a rule of thumb, the custodial parent, the one with whom the child stays for the major part of the year and whom the child is dependent is the one who gets tax benefits. But sometimes, the child might also be considered a dependent of the non-custodial parent when the custodial parent has to give him/her the right to take charge of the child. During that period, the non-custodial parent gets the right to claim the tax privileges. You might ask what’s in this for the custodial parent. There’s nothing actually, but the custodial parent needs to release the right to guardianship under special circumstances, such as, completing settlements.

What are the criteria that a non-custodial parent must satisfy for taking custody of the child and claming the tax benefits?

• Provide half support for the child
  One or both parents should provide at least half the support required  by the child for the entire year
• Parents should be divorced or separated
  The parents of the child must be legally divorced or separated officially for about 6 months in the latter case.
• Custody of the child for more than a year
  The child should have been in the custody of one or both parents for more than a year.
• Official authorization of child custody
  The custodial parent should provide a written declaration authorizing the non-custodial parent to take charge of the child for the year. The easiest way to do this now is to fill the IRS 8332(Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent) which the non-custodial parent must furnish to the tax officials for claiming the tax perks.

What are the tax benefits that you can claim as a non-custodial parent?

• Dependency Exemption tax which is $3,650 for this year and the next. It varies for people of higher income group than that specified.
• A child tax credit of $1000.
• Student loan interest deduction of up to $2500
• Tuition fee deduction of $4000 for higher level courses
• Medical care costs

All these deductions vary for people in higher income groups. These deductions can also be claimed by the custodial parents. The non-custodial parent has to face constraints. They cannot claim all tax benefits. They can only claim some.

There are certain tax benefits that both parents can claim. Even a non custodial parent can claim healthcare tax benefits along with the custodial parent provided he/she satisfies certain conditions of being legally divorced and also extending support to the child.