By: Z Family Law
Parents who are divorced may be wondering how the tax rules apply to them after a divorce. When parents go through a divorce, financial matters can become even more complicated. One specific dilemma that often arises is the question of claiming a child on taxes. Prior to the divorce, married parents typically file a joint tax return claiming their child as a dependent, which can provide significant tax benefits. However, filing taxes after divorce is different. Only one parent can claim the child as a dependent, resulting in potential disputes. In this article, we will explain the intricacies of claiming your child on taxes after divorce.
Rules From the IRS
The Internal Revenue Service (IRS) has specific rules regarding claiming a dependent after a divorce. When parents separate or get divorced, determining who can claim the child on their taxes becomes an important issue. The IRS has several guidelines in place to establish which parent is eligible to claim the child, and these guidelines primarily revolve around the child's residency and the financial support provided by each parent.
First and foremost, the IRS requires the child to have lived with one or both parents for more than half of the tax year in order to be claimed as a dependent. The parent with whom the child lived for the majority of the year is typically entitled to claim the child as a dependent. However, if the custodial parent agrees to release the claim, the noncustodial parent may claim the child, provided certain conditions are met.
If the child meets the residency requirements, the IRS then evaluates the income of each parent. In situations where the child (or children) reside equally with both parents, the IRS looks at the amount each parent contributes. The custodial parent usually bears the primary responsibility for the child's financial support, but if the child resides equally with both parents, the parent that provides the majority of financial support or has a higher adjusted gross income, may be eligible to claim the child as a dependent. In this specific circumstance, it is important to check with your CPA or tax preparer.
It is important to note that claiming a child as a dependent after a divorce requires careful consideration and adherence to IRS rules. Any disputes about who can claim the child should be resolved through discussions or legal agreements between the parents. Consulting with a tax professional or referring to IRS publications can also provide valuable guidance in navigating the complexities of claiming your child on taxes after divorce. Looking for an intro to begin your divorce? Watch our free ‘Preparing for Your Divorce Initial Case Assessment’ to get started.
Can Divorced Parents Take Turns?
When it comes to filing taxes after a divorce, one common question that arises is whether divorced parents can take turns claiming their child as a dependent. In short, yes, divorced parents can take turns claiming their dependent each year so long as they abide by the rules set forth by the IRS. This agreement must be made through a formal divorce or marital settlement agreement stating that parents will take turns claiming they are dependent on their taxes for alternating years. This type of tax situation can be resolved with the right tax preparer so you can get the tax credit you are entitled to.
To take turns claiming the child on your taxes every other year, certain forms must be processed. IRS Form 8832 must be filed by the custodial parent to state that they waive the child tax credit every other year. By waiving the child tax credit as the custodial parent, this gives the noncustodial parent a chance to claim the credit on their taxes for the dependent.
Claiming your child on taxes after divorce can be a tricky situation if the rules aren't followed correctly. Without Form 8832 filed, the only other way to claim a child after divorce is to have the child live with the parent for at least six months out of the year and provide half of their support.
What Happens if Both Parents Claim the Child?
When both parents claim a child on their tax returns after a divorce, it can lead to potential complications and legal consequences. As discussed, the IRS has specific rules and guidelines regarding the claiming of dependents for tax purposes. According to these rules, only one parent can claim a child as a dependent on their tax return. Generally, the parent who has primary custody of the child is entitled to claim the child as a dependent. However, in cases where parents have joint custody or share custody equally, the IRS requires them to decide who will claim the child.
If both parents claim the child on their taxes, it can trigger an IRS audit or investigation. The IRS may request supporting documentation, such as a court order or written agreement regarding the custody arrangement, to determine the correct parent to claim the child. In such cases, it is essential to have clear and legally binding documentation to avoid any misunderstandings or penalties.
Divorcing parents need to communicate effectively and reach an agreement about who will claim the child on taxes. They can either follow the IRS guidelines and choose the custodial parent as the claimant or develop an alternative arrangement that works for both parties. Consulting with a tax professional can also be helpful in understanding the rules and avoiding potential tax issues.
Finding a Lawyer You Can Trust
Divorce can be a trying time and will raise many tough questions. When dealing with the challenges of claiming your child on taxes after divorce, you should feel at ease knowing you have the right lawyer by your side. With a dedicated Z Family Law attorney, we will simplify the process and expertly lead you toward your new beginning. Plus, we’ve developed relationships with other trusted professionals, including tax preparers and CPAs, so you always know who to call when navigating every aspect of your divorce. Call us today at (301) 388-5528 or email us at hello@zfamilylaw.com to set up your initial consultation and get the answers you need!