We would like to thank Michelle Petrowski, Certified Financial Planner for this valuable information for divorcing stay at home parents looking for ways to finance a divorce.
Divorce is stressful and can be expensive - and wondering how to pay for it just adds to a client’s the concerns, and the ARP tax changes to various tax credits for children creates 2 unique opportunities that Michelle spoke about at the Maricopa Association of Family Mediators Tax update in August 2021.
The parameters & restrictions have been changed to favor the less earning spouse for 2021. In 2021 ONLY (as it stands):
- the Child Tax Credit (CTC) is now refundable for parents with no income
OPPORTUNITY: A parent with no income that is not working, might not typically file a tax return. However, it may make real sense for them, if separated, to consider filing Federal taxes separately in 2021, go to the IRS portal & fill out status, and file 2021 taxes in 2022 to get the Child Care Tax Credit as this year ONY, it is partially refundable
OPPORTUNITY: If a parent doesn’t have a job, but needs to start looking and has (or will have) dependent care expenses in 2021, it may make sense to file for unemployment and start looking for employment immediately, as the unemployment income will count for “earned income” and they can receive a pretty substantial Child and Dependent Care Tax Credit
Want further information or assistance? Please reach out directly to Michelle Petrowski.
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