Taxes Question (Simple, I think)

[Lem0nz]

I'm unfamiliar with taxes and generally just turbotax my way through every year but am recently divorced. My ex-wife and I are still very good friends and share a daughter. Her income is 50k and mine will be substantially higher.

Irrespective of the divorce agreement we both coparent incredibly functionally and I am interested in maximizing our tax return for who claims her to get the most money, I don't care if it is the ex or if it is me. My question is who will benefit more from claiming our daughter and get the most bang for our buck? Her at the much lower income, or me at the much higher income (or does it not make a difference)? Whoever benefits most is who I would like to claim her and we both plan to take whatever money that returns to us and invest it in her future as a way to settle this issue that makes us both happy.

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[thesauce]

Run it both ways but probably your wife will get the biggest benefit. The child tax credit phases out as income goes up.

 

[SigmaFS]

Agree with thesauce. There's no longer an exemption deduction for dependents, so it might only be the child tax credit. The credit income phase out begins when modified adjusted gross income hits $200k for single filer.

 

[Lem0nz]

Perfect, that’s what I needed to know. I’ll be way north of that so I’ll give it to her starting next year.

Thanks guys.