Navigating life post-divorce with children is complicated, and you are likely to come across many issues you did not anticipate when drafting your child custody agreement. One such issue has to do with taxes or, more specifically, which parent may claim the child as a dependent. With the tax deadline fast approaching, you may wonder, who can claim your child on this year’s return — you or your ex? GoBankingRates explains the tax rules for claiming dependents as a divorced or separated parent.
Generally speaking, a child “belongs” to the custodial parent or the parent who has custody for the majority of the year. This parent gets the bulk of the tax breaks, especially if he or she files as head of household. According to the IRS, heads of households enjoy a lower tax rate than those who file single or married filing separately. They can also claim credits not available to other types of filers, such as earned income credit and dependent care.
Understanding Tax Requirements
Though the custodial parent is legally entitled to claim the child on his or her tax return each year, the IRS does allow him or her to transfer the tax benefits to the non-custodial parent. To do this, the custodial parent must file IRS Form 8332.
Additionally, your situation must meet three requirements:
- You and your child’s other parent must have been legally separated or divorced for at least six months of the tax year.
- You and/or the other parent must have had custody of the child for more than half the year.
- You and/or your ex must have provided at least half the support your child required throughout the year. If your situation meets these requirements, then the custodial parent may transfer tax benefits to the non-custodial parent.
What happens, though, if you have joint custody of your child? In these cases, parents may choose to alternate years. However, if you want to go this route, you need to make sure the alternating schedule is written into the shared parenting agreement. Otherwise, there is no way to enforce the alternating schedule. If you and your child’s other parent both claim your child, you face legal consequences.
Having more than one child with your former partner may make things easier for you two. Per the law, you can claim one child and your ex can claim the other. This would ensure you both enjoy the tax benefits every year.