If you are recently divorced or separated, you may be unclear about how to handle the process of claiming dependents on your upcoming tax return. And discussions can quickly become contentious; there is often disagreement about who should be entitled to claim the children. After all, the person who claims them reaps financial rewards that the other does not.
In amicable splits involving two children, where parents share child custody 50-50, the answer to who should claim dependents is usually clear; each parent will claim one child. But these straightforward, cookie-cutter situations are less common than not. What if you have one child or five children? What if you share custody, but the kids spend most of their time with one parent? What if you have a 50-50 custody arrangement, but one parent covers the majority of expenses?
Who Gets the Tax Breaks and Benefits?
Claiming a dependent child generally provides significant tax benefits and breaks, including child tax credits, the Earned Income Credit, and better filing status overall. And for many divorced parents, the ability to claim dependent children is even more important due to tax changes in recent years.
According to attorney Robert L. Schwartz of Phoenix-based Dickinson Wright, the tax reform act has significantly changed the historical treatment of spousal maintenance, which used to be called alimony.
“Spousal maintenance is no longer tax-deductible,” said Schwartz. “Thus, it is more important to make sure a divorced spouse can claim a child or children as a dependent and potentially file as head of household. To do so, the child must be in the parent's physical custody for more than one-half of the calendar year.”
When the Noncustodial Parent Can Claim Dependents
It is most common for the custodial parent to claim any dependent children. However, if the noncustodial parent pays half or more of the costs related to raising and supporting the child(ren), the noncustodial parent may claim the dependent. A divorce or separation decree may also state that the noncustodial parent is entitled to claim the child(ren).
If you are divorced or separated and uncertain about who is going to claim your dependent children, it is important to talk to your ex before filing. If both of you end up claiming the same child or children, the first return will be accepted, and the second will need to be resubmitted, with the dependent removed. This will likely lead to extra work, additional confusion, and the potential for increased conflict.
If you and your ex have no official custody arrangement or divorce or separation decree, you can use the following guidelines to determine who should be able to claim your children as dependents. These guidelines are often referred to as “tie-breaker rules.” Of course, explaining these rules to a frustrated ex-partner may not result in a positive outcome. If you cannot reach a mutual agreement on your own, you may need to consult with a family law attorney in your area. Generally speaking, the parent claiming the child as a dependent will be:
- The parent with whom the child spends the majority of his or her time.
- The parent with the highest adjusted gross income, if custody is shared 50-50.
- The biological or adopted parent, if only one of the taxpayers is the parent to the child.
If no decision can be reached once these tie-breaker rules have been considered, contact an experienced family law attorney to determine how to proceed.
Contact a Family Law Attorney Today
If you are divorced or separated and have questions about tax filings and other issues related to personal finances, a family law attorney can help you protect your rights and interests. Although any legal issue is inherently stressful, those surrounding divorce can be particularly challenging. In a divorce, emotions often take over and the stakes are high, especially when it comes to child custody and financial matters. A skilled, experienced family law attorney can help you protect your assets, reach a fair custody agreement, reduce expenses, and give you the peace of mind you need to get on with your life. Divorce can be one of the most stressful experiences in a person’s life, but it doesn’t have to be. Contact a family law attorney today for a consultation about your case.