Along with the colored spring blooms come allergies…and tax day! Tax day is quickly approaching and a very common question of divorced and separated parents is “Who gets to claim the kids?”
Without a court order or parenting plan that specifically states who claims the children, the federal tax code determines which parent is entitled to claim the dependency exemption and tax credits. This determination is based on which parent provides financial support for the children and the majority of the care for the children.
Under the Internal Revenue Code (“IRC”) (the tax laws that the Internal Revenue Service (IRS) operates under), a taxpayer may claim a dependency exemption and tax credits for a “qualifying child.” The child should be the child or dependent of the taxpayer who has the same residence as the taxpayer for more than half of the year, who is under 19 years old (or a student under 24), and who has not provided over half of her own support during the year.
For divorced or separated parents, there is a separate rule that qualifies a child who is in the custody of one or both of the parents for more than half of the year and who receives over half of her support during the year from the parents. In this situation, the child is treated as the qualifying child of the custodial parent.
For IRS reasons, designating a parent as “custodial” does not depend on who has the “title” of custodial parent in the court order or parenting plan or whether one parent has sole physical or legal custody. The IRC defines the custodial parent as the parent who has the child for the greater portion of the year.
However, the IRC does allow for the non-custodial parent to claim a dependency exemption for a child if the custodial parent executes an IRS form (Form 8332) which allows the release of the exemption. The IRS will not allow a non-custodial parent to claim a dependency exemption without the fully executed form, even if a court order specifically allows the non-custodial parent to take the exemption.
It’s a good idea to give some thought to who should claim the children before you sign off on your divorce settlement. Claiming a child as a dependent carries with it certain financial advantages that can vary widely, depending upon many factors, including the parents’ incomes. Your tax preparer, in conjunction with your divorce lawyer, should be able to assist you in making this determination.
The family law attorneys at Paule, Camazine & Blumenthal are experienced in dealing with the many financial issues that arise in divorce, including those related to your taxes.