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50 Northcrest Drive, Council Bluffs, Iowa 51503

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Tax Season and the Dependency Exemption

By Jan 25, 2016 Posted in Articles

In a divorce where there are children involved, the allocation of the annual dependency exemption for tax purposes is always discussed.  The IRS has taken the position that the allocation of the exemption should go to the spouse that has custody of the child(ren).  The court can, however, reallocate the exemption in a divorce proceeding.  Based on the passage of the Tax Reform Act of 1997 the exemption now also has other “rights” of use attached to it which include, but are not limited to, the right to use the Hope Scholarship and the Lifetime Learning Credit.   The Hope Scholarship provides that anyone who pays college tuition for a dependent can claim a credit for a percentage of the tuition for a student attending school at least half time and is good for a specific number of years of tuition for the student.  The Lifetime Learning Credit kicks in after you have used up the Hope Scholarship and is also a credit toward tuition.  The dependency exemption, therefore, carries more to it than just the exemption itself.    

For more information on this and other family law related issues, please contact Shannon Simpson at Simpson Legal Group, LLC today at (712) 256-9899.

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50 Northcrest Drive, Council Bluffs, Iowa 51503
Phone: 712.256.9899

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