Your Life

Your Life

Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.

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Pioneer
Posts: 2
Registered: ‎03-16-2017

Getting divorced. Claiming dependents.

Hello.

I am getting divorced this year. We have two minor children, 13 and 10. My gross income last year was $156,000, so we could not claim either child as a dependent. Once we divorce I do not foresee my earnings being below the threshold that will allow me to claim them. My husband is self employed. I am planning on buying a house within the next year and then can itemize my deductions. Could the itemized deductions decrease my numbers so that I can claim them? Or would it be better to allow my husband to claim them? Thanks so much in advance for any help you can give.

Anne J

 

Tax Pro
Posts: 5,431
Registered: ‎02-23-2016

Re: Getting divorced. Claiming dependents.

Hi akajones,

 

Welcome to the H&R Block community.

 

Actually, you can claim your kids as dependents, you just will not get a personal exemption for them or yourself if your income falls under a certain level.  You'll still get the increase in your standard deduction that comes with head of household status though.

 

Exemption phase-out levels are:

  • $155,650 for MFS
  • $259,400 for single taxpayers
  • $285,350 for heads of household
  • $311,300 for MFJ

 

You must reduce your exemptions amount by 2% for each $2,500 that your AGI is above the thresholds I just mentioned.  If your AGI exceeds the threshold for your filing status by $122,500 or more then your exemptions are reduced to 0.  For married filing separately it's a 2% reduction for each $1,250 by which your AGI exceeds the threshold and your exemptions phase-out completely when your AGI exceeds the threshold by $61,250.

 

So you can probably get your exemptions either all or in part in addition to the increase in your standard deduction.

 

On the other hand, if your husband's income is significantly lower than yours and he qualifies to file as head of household rather than MFS for 2017 then he may qualify for the earned income credit and the child tax credit, and if so then claiming the kids will benefit him much more than it will you.

 

So with that all said, let's look at Schedule A.  If you itemize your deductions you do not get a standard deduction, so therefore your Schedule A deductions would have to exceed your 2017 standard deduction by quite a bit in order to lower your taxable income by significantly more than the MFJ standard deduction that you're probably used to would lower it.  If you can qualify for any tax credits they will likely help out more but you should still itemize if your Schedule A deductions exceed your standard deduction even if only by a small amount.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)