What is A Child Custody Contract?
A child custody agreement may have serious implications on your tax filing and your taxes in general. This problem should be tackled with your attorney or with your accountant if you are going with the process of negotiating or maybe handling child custody or maybe a separation and divorce agreement. Waiting till once you have completed a child custody contract to check out the tax impact is not adviseable.
State law on child custody will not dictate who gets the tax deductions. If your child custody agreement is entirely silent with this issue, the parent with primary residential or sole custody may have all of the tax benefits available with the children. That party can claim the kids as deductions, and so on. This could be a substantial issue. There are parents who simply presume that as long as they are paying thousands per 12 months in support, they could take the children as deductions. Not so. This is vital the fact that almost all child support payments are not tax deductible to the payor plus they are not taxable to the recipient mother or father.
Thus, when negotiating your child custody agreement, you must address the issue of how custody is going to be structured and who’ll recieve the tax benefits. This negotiation should take part in an overall financial system that involves a consideration of most issues, including child custody, child support, property, alimony, and also tax effects.
The ability to declare head of family rather than married declaring separate or filing single could be amazingly crucial to your entire tax system. You could claim head of household when you have your children for more than 50% of the time. Thus, a head of household tax filing should be a part of the overall negotiating outline in a divorce or even separation circumstance. A child custody agreement that is silent on this issue is very not a properly negotiated or perhaps written contract.
Your child custody agreement could handle this matter in many ways. If the child custody agreement gives for joint shared custody, it ought to state who has the children for 50% of the time. If you have two kids, you can divide that up to ensure that each mother or father has an opportunity of fiing for head of family. If you simply get joint custody then one parent provides residential custody, you can certainly still provide a head of household deduction for the other father or mother by wording the contract you might say that permits that processing.
There are other tax benefits designed to parents which have to be considered if negotiating a child custody contract. Many or most of those tax benefits are variable dependant on your income level and whether you could claim your child or children as deductions. In case you are really thinking through your child custody agreement, you will negotiate many of these benefits. The aim must be to take full advantage of all available benefits for both parties, thereby giving an overall highly beneficial tax impact on your child custody contract.
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