Fields and Dennis LLP

  • Our Firm
    • Our Approach and Philosophy
    • News and Media Coverage
  • Attorneys
    • Sheryl J. Dennis
    • Jonathan E. Fields
    • Vicki L. Shemin, J.D., LICSW, ACSW
    • Hugh F. Ferguson, Ph.D.
    • Andrea E. DeLaney
    • Wendie E. Murstein
    • Jonathan Crafts
    • Support Staff
      • RIKKI B. SAKSIK
  • Practices
    • Online Divorce Mediations
    • Fledgling Estate Plan for Millennials
    • Family Law
    • Divorce
    • Dispute Resolution
    • Estate Planning
    • Elder Law
    • Guardianship
    • Probate
    • Real Estate Law
    • Civil Litigation
    • Business Litigation
    • White-Collar Criminal & Regulatory Defense and Investigations
    • Mediation
    • Collaborative Law
    • Parent Coordinator
    • Arbitration
  • Resources
    • Covid 19 / Coronavirus Resource Page
    • Fledgling Estate Plan
    • Legal Information
    • Significant Cases
    • Psychology of Divorce
    • Cyber Issues and Divorce
    • Books + Videos
  • Blogs
    • Fields and Dennis LLP Blog
    • Divorce And Mediation Blog
    • Massachusetts Estate Planning Blog
  • Contact
    • Online Consultations & Mediations
    • Map & Directions
    • Pay Invoices Online
    • Contact Us
  • What Others are Saying
  • (781) 489-6776
You are here: Home / Child Tax Credit and Dependency Exemptions: How they Work Together Under the New Tax Law

Child Tax Credit and Dependency Exemptions: How they Work Together Under the New Tax Law

With the new Tax Cuts and Jobs Act of 2017 (TCJA), Congress made significant changes to dependency exemptions and child tax credits that will matter a lot to divorcing parents.  The key takeaway: the Child Tax Credit follows whoever has the dependency exemption – so it still matters how the dependency exemption is allocated in divorce agreements.  Further, to those who say that the TCJA eliminated the dependency exemption — this is not true.  It has been reduced to zero through 2025 but it has not been eliminated.

A little background first.  The dependency exemption was $4,050 per “qualifying child” in 2017 – which meant that, to someone with a 35% effective tax rate, it was worth about $1,400.  It was available to most taxpayers as it only began to phase out for single filers at adjusted gross incomes of $261,500.

Subject to a multiplicity of factors beyond the scope here, the “qualifying child” was one who reached the age of emancipation according to the state in which the child is domiciled.  This varies from state to state – in Massachusetts, it is typically twenty-three.

The primary custodial parent is entitled to claim the dependency exemption unless the parent agrees to release the exemption to the other parent by completing and filing with the IRS Form 8332.  Divorce agreements typically contain a provision as to how the dependency exemption is allocated.

The Child Tax Credit, as noted above, attached to whoever had the dependency exemption – and the TCJA doesn’t change this.  However, until TCJA, the Child Tax Credit ($1,000 per child in 2017) began to phase out for single filers at adjusted gross incomes of $75,000 – so many divorce lawyers who deal with higher net worth clients never really confronted it.

The TCJA made the Child Tax Credit more valuable, doubling it to $2,000 per “qualifying child” and making it available to most taxpayers – it only begins to phase out for single filers at adjusted gross incomes of $200,000.  And, as always, unlike the dependency exemption, it’s a credit – that is, it applies dollar for dollar against any taxes owed.  Even better, it’s a refundable credit up to $1,400 per child. This means that, if the amount of the credit is larger than the tax owed, the taxpayer gets a cash refund for the difference (up to $1,400).

As with the dependency exemption, there are a host of factors beyond the scope here that define the “qualifying child.”  For the most part, however, to be eligible for the Child Tax Credit such a child must be under seventeen years old as of December 31 of the tax year in order for the Child Tax Credit to apply.

The bottom line: if you’re going through a divorce, make sure you and/or your lawyer have a good handle on how the new tax law has impacted this area.  You don’t want to leave valuable dollars on the table.

 

Contact Us

Phone: 781.489.6776
Fax: 781.489.6233
80 William Street — Suite 210
Wellesley, MA 02481 USA

Recent Posts

A Diamond is Forever, But the Engagement Ring May Be Ne’er

January 27, 2021

The article below was written by Vicki L. Shemin, J.D., LICSW, ACSW  and published in Citybizlist on January 25, 2021 Lest you think that the proprieties and perplexities surrounding broken engagements are a modern phenomenon, we need only look back to the 15th century. It is said that in 1477, Archduke Maximillian of Austria commissioned […]

Attorney Jonathan E. Fields Quoted in Wall Street Journal

January 21, 2021

Attorney Jonathan E. Fields was quoted in today’s Wall Street Journal Millennials Embrace Prenups—but Through a Very Different Lens Than in the Past Millennials are using prenups to address new economic and social issues—including rising student debt, social-media use and embryo ownership By Cheryl Winokur Munk Jan. 21, 2021 1:00 pm ET Millennials are often […]

Vicki L. Shemin, J.D., LICSW, ACSW receives the Avvo Clients’ Choice Award Badge for 2021

January 14, 2021

Vicki L. Shemin, J.D., LICSW, ACSW was presented with Avvo Clients’ Choice Award Badge for 2021. This award is given to attorneys whose outstanding legal services have resulted in highly satisfied clients. There’s nothing that an attorney can do to ask for a Clients’ Choice Award. Instead, Avvo makes the award based only on quality […]

Attorney Jonathan Fields Quoted in Massachusetts Lawyers Weekly

January 5, 2021

Snap Judgments: Lawyers predict issue that will dominate legal landscape in 2021 By: Kris Olson December 31, 2020 (From Massachusetts Lawyers Weekly)  Q. Prediction time: What issue on the horizon will dominate the legal landscape in 2021?   “Five hours of time for a five-minute hearing has never seemed so wasteful. With the experience of remote hearings, will […]

Please Support Fields and Dennis LLP’s Fundraiser for K9s For Warriors

December 21, 2020

K9s For Warriors saves both warriors and rescue dogs. The program serves our warriors with service-connected Post-traumatic Stress Disability (PTSD) traumatic brain injury (TBI) and/or military sexual trauma, which can be deadly disorders. A trained rescue dog is paired with a warrior and the two meet for two weeks of training together at one of […]

Contact Us

Please use the contact form below to email Fields and Dennis LLP.

    Your Name (required)

    Daytime phone (required)

    Your Email (required)

    Brief description of your legal issue:

    Sending a message to Fields and Dennis LLP does not constitute an Attorney Client relationship. Please review our Communication Policy before sending any messages.

    Location

    FIELDS AND DENNIS LLP
    80 William Street — Suite 210
    Wellesley, MA 02481 USA
    (T) 781.489.6776
    (F) 781.489.6233

    You can also find us on…

    Recent Blogs

    • Advice On Cooperative Co-Parenting During & After An Acrimonious Divorce: It will Improve your Mental Health
    • A Diamond is Forever, But the Engagement Ring May Be Ne’er
    • Attorney Jonathan E. Fields featured in Times of London on Prenuptial Agreements and Social Media
    • Attorney Jonathan E. Fields Quoted in Wall Street Journal
    • Vicki L. Shemin, J.D., LICSW, ACSW receives the Avvo Clients’ Choice Award Badge for 2021

    Recent Firm News & Coverage

    • A Diamond is Forever, But the Engagement Ring May Be Ne’er

    • Attorney Jonathan E. Fields Quoted in Wall Street Journal

    • Vicki L. Shemin, J.D., LICSW, ACSW receives the Avvo Clients’ Choice Award Badge for 2021

    • Attorney Jonathan Fields Quoted in Massachusetts Lawyers Weekly

    • Please Support Fields and Dennis LLP’s Fundraiser for K9s For Warriors

    The Boston metro family law, divorce and estate planning attorneys at the law firm of Fields and Dennis LLP are based in the Newton Wellesley area and serve the city of Newton: Auburndale, Chestnut Hill, Newton Centre, Newton Corner, Newton Upper Falls, Newton Lower Falls, Nonantum, Oak Hill, Waban and West Newton and town of Wellesley: Babson Park, Wellesley Hills, Wellesley Square Fields and Dennis also serves many clients in the Greater Boston and Massachusetts region including Ashland, Dover, Holliston, Medfield, Needham, Sherborn, Westwood, and all of Massachusetts.

    Copyright 2020 Fields and Dennis LLP

    Attorneys | Divorce Attorneys | Estate Planning Attorneys | Firm Overview |

    Disclaimer | Privacy Policy | Contact | Pay Invoice