The Truth Behind Child Custody and Taxes

There are several financial decisions to consider when filing for divorce in California.  One you may not be thinking about, but will likely have long-term monetary consequences, is whether you may be able to claim your children on your taxes.  Under federal tax law, children may only be declared as dependent by one parent.  Both parents cannot claim the children as dependent on their taxes.  When parents are married and file their taxes together, they both can take advantage of the tax benefits.  But who gets to claim the child on their taxes post-divorce?  This article analyzes that question.
Which Parent Can Claim Their Child as a Dependent?

Which Parent Can Claim Their Child as a Dependent?

When parents are legally separated, it can be more challenging to determine which parent gets to claim the dependent child.  According to the IRS, the custodial parent, or the parent who has takes care of the child for the greater part of the year, holds a presumption that they get to claim the dependent child on their taxes.   However, this presumption is rebuttable by the non-custodial parent.

In order to rebut the presumption, the non-custodial parent must show either (1) that the divorce decree contains a provision that the non custodial parent will be able to claim the child as a dependent on their taxes OR (2) that the custodial parent has signed a declaration, through IRS form 8223, waiving their right to claim the child on their taxes.  IRS form 8223 allows the custodial parent to waive their right to claim the child on their taxes for one year, several years, or forever.  This form must be signed and attached to the income tax return when the taxes are filed by the non-custodial parent.

IRS Form 8223 is also helpful in the event that you and your partner share joint custody of your children.  In cases with joint custody figuring out which parent is the custodial parent is always a simple task.  Ideally, parents will have come to a conclusion about claiming the dependent child on taxes during the divorce process.  Alternatively, if your child splits their time 50/50 between you and your former spouse, you may come to an agreement where you switch off years where you claim the child on your taxes.  If you alternate years, it is essential that you complete form 8332 on a yearly basis.  To discuss this process in further detail, contact an expert family lawyer.

If you have two children or more children, you may each choose to take a child as a dependent.  If you each claim a child as a dependent you may also be able to each claim the favorable head of household filing status.Taking a child as a dependent may increase the amount of child support pay and if you are the one receiving the dependency exemption your child support may be lower. Be aware that the dependency exemptions phase out as your income increases until they phase out entirely.  Make sure you can use these exemptions before you enter into a dispute about them.

If you have more questions about taxes and children as you go through your divorce or after your divorce, connect with the family law attorneys at Walzer Melcher LLP today.

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