Question

Lillian and Michael were divorced last year. Michael has custody of their two children. Lillian pays $8,600 in child support payments during the current year. Michael pays $12,000 in alimony to Lillian. The total cost of supporting the children is $12,500. Michael and Lillian do not have any special agreement about dependents. How many total dependents may Michael claim for the current year?

Answer 1

Michael may claim both children as dependents for the current year.

Step-by-step explanation:

According to the given information, Michael has custody of the children, and Lillian pays $8,600 in child support. When determining the number of dependents, we typically use the qualifying child test. According to the IRS, a qualifying child must meet specific criteria, including being under the age of 19 (or 24 if a full-time student) and residing with the taxpayer for more than half of the year. Since Lillian does not have custody of the children, she would not meet the residency requirement, and as a result, Michael may claim both children as dependents for the current year.

Answer 2

Michael may claim the children as dependents if he has custody for the majority of the year and provides more than half of the financial support, considering the alimony and child support.

Step-by-step explanation:

In the context of tax regulations in the United States, whether Michael can claim the children as dependents depends on certain criteria, including the amount of support provided and the custodial arrangement.

The key factors are child support, alimony, and the total cost of supporting the children.

Child Support:

Lillian pays $8,600 in child support. Child support is not considered taxable income for the recipient (Michael) and does not impact the ability to claim dependents.

Alimony:

Michael pays $12,000 in alimony to Lillian. Alimony is not considered child support, and it does not affect the ability to claim dependents.

Total Cost of Supporting the Children:

The total cost of supporting the children is $12,500. This is relevant because the parent who provides more than half of the financial support for the children may typically claim them as dependents.

Custodial Arrangement:

The custodial arrangement is crucial. The custodial parent, the one with whom the children lived for the greater part of the year, is generally entitled to claim them as dependents.

Thus, Michael can claim the children as dependents if he has > 50% custody and provides > 50% financial support (including alimony and child support).