Dear Bonnie: Every year my flaky ex tries to take the kids on his tax return. I haven’t received any child support and neither I nor the kids have even seen him in three years. I always expect to get a big refund and end up with nothing. Is there anything I can do about this? – Ready to face murder charges in El Verano
Dear Ready: Rather than punch him out, beat him to the punch by filing your taxes first. The IRS will not get in the middle of a domestic dispute. Whoever files first gets the deduction. If the later-filing party is entitled to the deduction, he will have to make a case for it.
You can go back three years from the filing date of any tax return to claim a deduction. Put together important information relating to the validity of deducting your dependent. This includes paperwork such as school records which show the child lived at your address and records to prove that you provided more than 50 percent of the child’s support. Then contact the IRS on the phone number provided on the letter they sent disallowing the deduction and let them know you want to fight this. They will ask for the documentation. It might take a little bit of time and effort but you will end up with justice. The refunds in these cases could be sizeable if you qualify for the Earned Income Tax Credit.
Dear Bonnie: My ex says that I have to pay taxes on the child support she provides and that she’s going to take those payments as a deduction on her tax return. This doesn’t sound right to me. Do I really have to report that on my tax return? – Shocked in Agua Caliente
Dear Shocked: Child support is not taxable income. And it’s not deductible for the person who pays it either. Are you sure your ex is talking about child support and not alimony? Any payments classified in the marital separation agreement as alimony would be considered taxable income for you and deductible for the former spouse who pays it. In fact, a lot of audits arise due to the inconsistency of alimony reporting. The IRS matches up the income on one return with the deduction on the other and if they don’t match, someone’s getting audited!
Dear Bonnie: Last year I spent more than $27,000 on my kid’s tuition, room and board, books, living expenses, oh you name it! He was always in my pocket, but I don’t mind because I want to see him get a college education. After all, if he can bring down the big bucks later in life, I know I’ll be well taken care of. Anyway, how much of this can I deduct on my tax return? – Almost penniless on the East Side
Dear Penniless: First of all, it sounds as if you can still claim your son as a dependent on your tax return. You’ve provided more than 50 percent of his support, right? It doesn’t matter if he’s living with you as long as he’s a full time student. You may qualify for either the American Opportunity Credit (which replaces the Hope Credit) or the Lifetime Learning credit if you earn less than $90,000 per year (single) or $180,000 per year (married filing joint). The credit will be based on what you pay for tuition, books, fees, supplies, and computer, but it does not apply to living expenses or room and board. Check with your tax pro about all of the requirements; it can get tricky!
You don’t state your marital status but know this: if you are single or divorced and your son is away at school, you can still claim head of household rather than single for tax purposes. Your son’s absence is considered temporary.
By the way, folks, the education credits apply only to college education at a qualified learning institution. There are no credits for K-12 for tuition and other expenses paid to a private school. However, if your child is diagnosed with a learning disability, payments for tuition to special schools or tutoring programs and other associated expenses may be deductible as a medical expense. Check with your tax pro.
Bonnie Lee is an Enrolled Agent admitted to practice and representing taxpayers in all fifty states at all levels within the Internal Revenue Service who founded Symmetry Business Services in 1982 to represent taxpayers in audits, offers in compromise, tax problem resolution, tax preparation, tax planning, and to help non-filers safely re-enter the tax system. She is the author of “Taxpertise, The Complete Book of Dirty Little Secrets and Hidden Deductions for Small Business that the IRS Doesn’t Want You to Know.” You can hear her radio show on SunFM 91.3 on Tuesdays at 1 p.m. Contact her at 935.1755 or bonnie@taxpertise.com.
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