Because of my divorce decree, I’m responsible for providing health insurance for my two boys, ages 10 and 7. Right now, my ex and I each claim one child on our taxes. My employer doesn’t offer insurance, so I use the federal marketplace. This creates issues with covering the child I don’t claim. I can’t include him on marketplace coverage. If she’s willing to let me claim both kids on my taxes in 2025, what’s a fair amount to compensate her? I’ve seen $1700 mentioned, but I’m not sure.
$1700 isn’t really fair for her.
The Child Tax Credit is worth $2k. If the kids live with her most of the year, that’s the cost for her to let you claim the child as a non-custodial parent. She’d need to fill out Form 8332 for you, and while she’d lose the credit, she’d still be able to claim other things like the Earned Income Credit, Dependent Care Credit, and Head of Household status if she qualifies.
Since you’d save money on healthcare costs, you might want to share some of those savings with her as part of the deal.
How is the child you don’t claim currently insured? If your ex is covering their insurance, that cost should be part of the discussion. I’m not sure about current ACA pricing, but you’d need to factor in the tax credit you’d gain minus the insurance cost. If she’s no longer paying for that child’s insurance, it might even out a bit.
@Crosby
Right now, I buy short-term health insurance for the child I don’t claim. But now they’ve capped short-term plans to four months, so I can’t get longer coverage anymore. Adding him to her plan through her school job would cost $600-$700. She just applied for marketplace coverage for him, which would cost about $400 for a basic plan based on her income. This system doesn’t make it easy for someone in my position, so I’m trying to get creative.
@Denali
Why not have her add the child to her insurance and you reimburse her for the cost? That seems like a simpler way to handle this.
For context, I currently pay $207/month for health insurance for me and the son I claim. It’s a marketplace plan with an $1800 deductible. My goal is to claim the other son so we can all be on one plan and make things less messy. She’s not interested in adding them to her insurance and being reimbursed. I’m also not great with taxes, so it’s hard to argue my case. That’s why I’m here asking for help. The Form 8332 suggestion seems promising—thanks for that!
This depends on a few factors:
- Does the child spend more nights with you or her?
- Is she single, married, or living with someone?
- How much does she make?
- Does she have any other kids besides these two?
@Addison
She has the kids about 70% of the time.
She’s not married but lives with someone who works out of state, so he’s not always around.
She makes about $85-90k as a teacher.
I make around $55-60k gross.
Neither of us has other children.
@Denali
It sounds like claiming the child could be costly for both of you. Why do you need to claim the child for health insurance? From what I’ve read, you might still be able to cover the child on your ACA plan if you use Form 8332 to claim the tax credit while she keeps Head of Household and other credits.
This could reduce her tax hit compared to you fully claiming the child. For example, if the child is in paid childcare, not claiming them could increase her taxes by about $5k federally, while your benefit would only be about $2k. Using Form 8332 would mean she loses $2k, but you gain $2k, which is a better compromise overall.