Susan E. Thomas CPA
Remarriage with Children: Income Tax Considerations

Alimony payments:

  • Usually must be included in the gross income of the recipient
  • Can be deducted by the payer (if all requirements are met)
  • The divorce agreement may designate alimony as nontaxable and nondeductible
Marrying someone with children from a prior relationship can create a variety of income tax questions. Here are some points to consider.

Child support payments:

  • Ordinarily considered nontaxable income of the recipient
  • Are not deductible by the payer

Dependency exemptions:

  • Ordinarily, the custodial parent is entitled to claim the exemption, regardless of who pays child support
  • The noncustodial parent can claim the exemption if the custodial parent agrees in writing or it's part of the divorce agreement; IRS Form 8332 should be used by separated or divorced parents and attached to the noncustodial parent's tax return

Medical expenses deduction:

  • Custody of the child isn't required
  • Claiming the child as a dependent isn't required (although you must be eligible to claim the child as a dependent)
  • Medical expenses are only deductible to the extent they exceed 7.5 percent of adjusted gross income on the tax return

Child and dependent care credit:

  • Can only be claimed by the custodial parent
  • Must be for child-care expenses incurred so you can work
  • Can claim, if qualified, even if you're not claiming the child as a dependent

Child (and additional child) tax credit:

  • Can claim, if qualified, for a child you claim as a dependent
  • Custody of the child isn't required

Education credits (Hope credit, Lifetime Learning credit):

  • You must be claiming the child as a dependent
  • You must have paid qualified tuition and/or related expenses
  • Child must be a qualified post-secondary school student (Hope credit only)

Prepared by Broadridge Investor Communication Solutions, Inc, Copyright 2011