April 2024 CSQ

The Differential Impacts of Tax Credits and Filing
Status on Parents Who Live Apart
by Elizabeth Morgan, Management Consultant, Public
Knowledge, and Jim Fleming, Director, North Dakota Child
Support Services
It is widely known that raising children is expensive; however, the United
States tax code provides some individuals raising minor children with
several tax credits that can provide financial buffers, especially for lowincome
families. Some of these tax credits include the Child and
Dependent Care Credit, the Earned Income Tax Credit (EITC), and the
Child Tax Credit (CTC). This article will focus on the EITC and the CTC.
Some parents are also able to take advantage of filing taxes as Head of
Household.
Parents who live apart can experience a disparity in tax benefits between
their households based on which parent has primary custody of the
children, even when both parents contribute equally to raising the children.
This article explores the differential impacts of the application of the EITC
and CTC based on taxpayers’ income, filing status, and whether they claim
their child(ren) as dependents.
The Earned Income Tax Credit (EITC)
In the 1960s and 1970s, there was a debate over reforming welfare, at that
time known as the Aid to Families with Dependent Children (AFDC)
program. AFDC caseloads were increasing and there was an interest in
encouraging work and reducing the need for welfare. In 1975, Congress
enacted the Earned Income Tax Credit (EITC) on a temporary basis as part