Working out a child custody arrangement means considering many future possibilities. For instance, you and your ex may have to choose which one of you will be the custodial parent. This is important because the custodial parent is often in a position to receive benefits on behalf of a child or secure other financial assistance.
Kiplinger explains actions a custodial parent can take to financially help a child following the completion of a divorce settlement.
They can claim children as dependents
Claiming your children on your tax return gives you access to different federal tax benefits. Depending on the age of your children, you could claim the $500 credit or the $2,000 child credit. You can also file as the head of your household, which opens the way for you to claim the following:
- The earned income tax credit
- The health coverage credit
- Dependent care exclusions
Additionally, custodial parents may be eligible for federal stimulus checks if the federal government authorizes them. You should receive any federal checks that give payments for dependents.
They can help a child get college aid
At some point, your child will probably go to college. Your child could obtain financing for tuition by going through the Free Application for Federal Student Aid. To do so, the application must only list the assets and income of the custodial parent.
However, the custodial parent with the lower income can secure a greater amount of aid. Some couples switch custodial parent status so their child lives with the lower-earning parent for at least a year before starting a senior year in high school.
Given that it may be necessary to alter an agreement to change the custodial parent, it is important to keep certain eventualities in mind.
