Paule, Camazine & Blumenthal, P.C. posted in Tax Planning on Wednesday, October 28, 2015
By Paule, Camazine & Blumenthal, P.C.
When you are working on a settlement of your divorce, the issue of who gets to claim the children on tax returns is typically addressed. Getting to claim a child or children is important because the real tax benefits go far beyond claiming the child as your dependent.
In addition to the exemption itself, you should be considering the issues of head of household status, the child tax credit, the dependent care credit, and the earned income tax credit. While the dependency exemption decreases you income before income tax is assessed, the head of household status provides beneficial tax brackets (compared to filing as “single”), and the child tax credits decrease your income tax dollar for dollar. Each of these benefits has its own requirements which an accountant, tax attorney, or experienced family law attorney can explain to you.
However, if you are not the custodial parent (defined by the IRS as the parent who the child has spent more than one half of the year with), you may not be able to claim any of the benefits described above unless your former spouse signs Form 8332. Form 8332 allows your former spouse to release their right to claim the exemption for your child in the current year, or for future years. If your former spouse provides you a Form 8332 that releases his/her right to claim the exemption for a child in future years, you will be able to avoid annual follow up to ensure you have the ability to claim your child as your dependent. While a divorce decree may grant you the right to claim a child, the IRS does not allow you to claim your child without a Form 8332 (or similar statement), and will assess penalties and interest for the improperly filed return.
Making sure these issues are addressed in your divorce is important and the family law attorneys are Paule, Camazine & Blumenthal are available to assist you with these and other family law matters.