Tips & Info

For children of divorced parents, which parent is allowed to claim the child?

Previously, divorced parents would often agree upon certain years during which each parent would be allowed to claim their child on their tax returns. This agreement was often included in the divorce decree, such as one parent claims the child during even numbered years and the other parent claims the child during odd numbered years. The IRS, however, now says that the custodial parent is the parent who is entitled to claim the child as a dependent, regardless of what the divorce decree says.

The custodial parent is considered the parent with whom the child lives for the greater number of nights during the year. The child is considered to have lived with the parent for the night if the child sleeps at the parent’s home, regardless of whether or not the parent is present. The child is also considered to have lived with the parent for the night if the child is in the presence of the parent for the night, regardless of whether they are sleeping at the parent’s home, such as on a vacation.

The custodial parent has the right to claim the exemption for the child, but can waive this right and allow the noncustodial parent to claim the child. This is done by signing Form 8332, which can release the right to claim the exemption for 1 year, any number of years, or for all future years. Form 8332 allows the noncustodial parent to claim the child as a dependent for the year, which will allow the noncustodial parent to claim the child tax credit and additional child tax credit. The custodial parent can still claim head of household and claim the earned income credit for the year.

Can I still take a credit for purchasing energy efficient appliances and for making energy efficient improvements to my home?

You may still take a credit on your federal income tax return for energy efficient property purchased for your main home during 2011. However, the rules for claiming this credit have changed for 2011. The credit is now limited to 10% of the cost of the energy efficient property, and has a lifetime limit of $500. Additionally, you can only claim a credit of $200 for the purchase of windows. The credit is also limited in 2011 to costs of $50 for air circulating fans, $150 for qualified natural gas, oil furnace, hot water boiler, or propane furnaces, and $300 for energy efficient building property. Energy efficient building property includes insulation, exterior windows and doors, and certain qualifying energy efficient metal roofs.

Previously, for Indiana tax return purposes, taxpayer’s could take a credit for purchasing Energy Star heating and cooling equipment. This equipment included items such as water heaters, furnaces, air conditioning units, and programmable thermostats. The amount of the credit was $100 or 20% of the cost of the Energy Star equipment, whichever was less. This credit, however, expired at the end of 2010 and is no longer available on the Indiana return.

You may still take a deduction of up to $1,000 on your Indiana income tax return for the cost of insulation, weather stripping, storm windows and doors, thermal pane windows, and caulking purchased for your principal residence.

Can I deduct the cost of my child’s homeschooling or private school tuition?

For 2011, you can take a deduction on your Indiana tax return for certain amounts paid for your dependents to attend a private school or homeschool in Indiana. To qualify, the expenses must be paid for a child that can be claimed as a dependent on your tax return, and the child must also be eligible for a free education in an Indiana school corporation. The child must have been enrolled for at least 180 days during the year.

Qualifying expenses include amounts paid for enrollment in a private elementary or high school, as well as the costs of tuition, fees, textbooks, computer software, school supplies, and other items which are used primarily for academic purposes. You cannot, however, deduct the cost of personal computers when figuring this deduction.

The amount of the deduction is limited to $1,000 per child per year.

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