One of the many factors that must be considered after getting a divorce is the potential tax consequences of ending your marriage. If you and your ex-spouse share custody of a child, you must determine which of you has the right to claim the child for tax purposes. In general, the custodial parent – the one with 183 overnight visits or more – is entitled to federal and state tax deductions and benefits. However, this is a decision you can make with your ex-spouse.
Are You the Custodial Parent?
In family law, the “custodial parent” is the parent with whom the child spends the majority of his or her time. If the courts award primary custody to one parent and only visitation rights to the other, the custodial parent is easy to determine. In general, however, the courts prefer giving children equal time with each parent when possible and in the child’s best interests. This can make it more difficult to determine the custodial parent for tax reasons.
What Is the IRS Rule on Claiming Dependents?
The Internal Revenue Service has specific rules for claiming a dependent on federal income tax statements. When claiming children, the child must be under the age of 19 at the end of the year, under the age of 24 if a full-time student, or any age if permanently and totally disabled. The child also must not have provided more than half of his or her own support for the year.
Most relevant for parents who share 50/50 custody, the child must have lived with the person claiming the dependent for more than half of the year, meaning at least 183 overnights. However, the IRS states that there are exceptions to this rule for children of divorced or separated parents or parents who live apart. This nuance leads many parents to try to agree on who will claim child tax exemptions or deductions rather than judging by overnight stays alone.
Can You Decide Who Will Claim the Child Yourself?
If you have an equal 50/50 custody split with your ex-spouse, it can be difficult to determine if you qualify as the custodial parent for the tax year. For example, when calculating how many days you had your child overnight, you will need to take into account vacations, absences and special circumstances. For this reason, many parents agree between themselves who will claim the tax benefit for a shared child instead.
The IRS permits divorced and legally separated parents who share custody to decide which parent will claim the child on taxes. This decision is allowed to change from year to year. Many parents with equal parenting time choose to alternate years where the child will be claimed by one parent or the other. Another option is to have one parent claim the child every time and divide the tax benefits evenly.
If you have multiple children, you may wish to divide them between the two of you on your taxes to split the child tax credits evenly. If you have an odd number of children, you can alternate years for which parent can claim the extra child to keep things fair. It is often best to decide how you will claim a child on your taxes during divorce settlement negotiations to avoid arguments or issues later. If desired, it can be worked into your divorce settlement agreement.
If you need assistance with tax issues relating to a divorce or custody agreement, consult with the San Diego child custody attorneys at Boyd Law for legal advice.