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Treatment of Children

Generally, the child of a divorced or separated parent qualifies for the dependency exemption of the parent that he or she resided with for the longer period of time during the tax year (known as the custodial parent).

Tax Tip – The custodial parent may waive the exemption in favor of the non-custodial parent in a higher tax bracket, resulting in tax savings that can be passed along in the form of child support.

Parents may not split the tax benefits arising from the dependency exemption (such as the child tax credit and dependent care credit), although, in the case of more than one child in the family, each parent may claim a different child.  In contrast, where a student is a claimed a dependent, qualified tuition and related expenses paid by the student are treated as paid by the taxpayer, even if paid by a third party.

Tax Tip – The custodial parent who claims their child as a dependent may claim an education tax credit for qualified expenses paid by the non-custodial parent on behalf of the student.