When filing their federal tax returns, California parents may claim the child tax credit for all qualifying dependent children under age 17. The child tax credit may reduce the amount of income tax that a person owes to the IRS by up to $1,000 per child. If the credit amount exceeds what a parent owes to the IRS, the parent may receive a tax refund.
When two parents are divorced and filing separate tax returns, only one parent can claim the child tax credit. The parent with primary custody usually claims it but the custodial parent may release the right to use the dependency tax exemption to the other parent. To do this, the custodial parent must file Form 8332.
A custodial parent that files Form 8332 gives up the right to claim the dependency tax exemption so that the noncustodial parent can claim that exemption. The noncustodial parent may then file their tax return and claim the child tax credit for all of their qualifying children. For single tax filers who make more than $75,000 per year, the child tax credit may be limited.
Parents who pay child support may want to claim the child tax credit so that they can lower their tax bill or qualify for a tax refund. A lawyer may be able to help a divorced parent to negotiate an agreement with their ex-spouse about releasing the dependency tax exemption prior to tax season. While two parents are going through a divorce, they might agree to claim the child tax credit in alternating years.