If you are not the custodial parent, you may still claim your child as your tax dependent, provided your ex-spouse transfers his or her right to the deduction to you by signing a special IRS form. The deduction applies to the first 60 months in which interest payments are required, and you must have the legal obligation to repay the loan in order to deduct the interest. If you are entitled to claim your child as your dependent, you may be eligible for these valuable tax credits. Dependent care credit - If you pay day care expenses so you can work or look for work, you may qualify for this tax credit. Education credits - If you paid for your child to attend college or vocational school, you may qualify for the Hope credit or the lifetime learning credit.
Children increase the credit amount.
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