Solved

Wife and claimed kids for 2020 and received child tax credit checks. Father is supposed to claim kids in 2021. How does that effect my wife’s and I taxes this year?

Forum|Forum|4 years ago
December 14, 2021
3 replies
0 views

No text available

TurboTax Online

Best answer by Opus 17

First, where did the children actually live? Only the parent where the children lived more than half the year can claim the child and dependent care credit (day care credit) and earned income credit. If that's you, you will qualify again.

Regarding the child tax credit, that goes to the parent who actually claims the child as a dependent. If you don't claim the children as dependents, but you did get the advance child tax credit payments, you will have to repay those advance credits.

Regarding the stimulus, if you got the $1400 per dependent round 3 (EIP 3) stimulus payment in 2021, based on your 2020 tax return, and you don't claim the children as dependents on your 2021 return, you don't have to repay the stimulus.

Remember that if you are the parents where the children lived more than half the year, the other parent can't claim the children unless you give them a signed form 8332 dependent release. In Turbotax, you would answer that the children lived with you more than half the year but you are allowing the other parent to claim them with a form 8332. Turbotax will not put them on your return as dependents, but they will be listed as qualifying persons for EIC and the dependent care credit, if you claim those credits.

DoninGA

Employee

Since she knew that the Father was going to claim the children as dependents on his 2021 tax return she should have opted out of receiving the Advance Child Tax Credits.

When you file your 2021 tax return and the children are not dependents on your tax return you will have to pay back the Advance Child Tax Credits received during calendar year 2021. They will be entered on your federal tax return, Form 1040, as a tax liability.

L

lordielordAuthor

We did not know we could have opted out. We had no idea the government was sending the money. We received a letter in the mail a few days after the first payment and thought it was to late to opt out.

O

Opus 17Answer

Employee

First, where did the children actually live? Only the parent where the children lived more than half the year can claim the child and dependent care credit (day care credit) and earned income credit. If that's you, you will qualify again.

Regarding the child tax credit, that goes to the parent who actually claims the child as a dependent. If you don't claim the children as dependents, but you did get the advance child tax credit payments, you will have to repay those advance credits.

Regarding the stimulus, if you got the $1400 per dependent round 3 (EIP 3) stimulus payment in 2021, based on your 2020 tax return, and you don't claim the children as dependents on your 2021 return, you don't have to repay the stimulus.

Remember that if you are the parents where the children lived more than half the year, the other parent can't claim the children unless you give them a signed form 8332 dependent release. In Turbotax, you would answer that the children lived with you more than half the year but you are allowing the other parent to claim them with a form 8332. Turbotax will not put them on your return as dependents, but they will be listed as qualifying persons for EIC and the dependent care credit, if you claim those credits.

L

lordielordAuthor

Thank you for the information.

Follow up question:

They live with us full-time and we have went to court to get Parental Custody. Problem is, their original divorce decree, when her and ex-husband lived in same town and split parenting time, states they each claim children every other year though we live in totally different states now but claiming kids for taxes was not re-addressed. Since it was not stated in Parental Custody paperwork, do we go with what decree says or do we claim for taxes because they live with us full-time?

O

Opus 17

Employee

@lordielord

That would be a matter to address with your attorney or the court. If the new order completely replaced the old order, then possibly the dependent sharing requirement no longer exists, if it is not in writing in the new order. Or, if the new order modified the old order, then any unmodified parts might still be enforceable. We can’t give legal advice.

The IRS will not enforce your court order (except in limited circumstances with a custody order that was signed in 2008 or earlier). The IRS will be quite happy to award you the dependent claim if you had custody more than half the nights of the year. However, if the other parent complains to the court, the court could take action against you if you violated their order, such as ordering you to sign form 8332, or holding you in contempt, or taking other enforcement action. Likewise, you could go to the court and ask them to modify the order in your favor, based on the changed circumstances. But I would not knowingly violate or refuse to follow a court order without taking advice from my attorney first.

VolvoGirl

Employee

May I ask.....are you separated? Is there a reason you're not filing aJoint return? Joint is usually better even if you are separated.

L

lordielordAuthor

They are my step-children. Wife’s divorce decree states kids father and her claim kids ever other year. Last year we claimed, didn’t hear anything about child tax credit advance until the day after we received first payment. Was not able to opt and very upset we didn’t have a say on if we wanted it or not. We would have defiantly not taken it.