Parents of minor children in New Jersey could start receiving monthly relief from the IRS according to the tax legislation of 2020. Many divorced parents wonder who between them gets this relief or how they are supposed to share it. It may be beneficial to look at how to handle the new child tax credit with separated parents.
The new child tax credit
The new tax credit makes it easier for parents with young children to support their kids. The amount that parents of children 17 years old and younger can receive is $3,000 per year. However, parents can get $3,600 from the IRS per year for children aged 5 and below.
New child tax relief and divorced parents
The law gets a little complex regarding separated parents and their claim to the child tax relief basing on their custodial rights and child support. Both the state and federal laws mainly consider the custodial parent as the one who should receive the child tax credit. According to the law, the custodial parent has more than 50% of physical custody of the child.
For parents with joint custody, the court may award the child tax credit to both parents. However, it is important to note that the court often defines the custodial parent even when you both share an equal amount of physical time with your child. For instance, which parent contributes more financially to the child? If you have more than one kid, one parent could be the primary custodian of one child or more while the other parent may be the custodial parent for the other children or none.
It may help if you consult with your attorney or a tax advisor to work out how to handle the new child tax credit. You may work out with your child’s other parent how to share the tax relief in the following years.