As divorce and custody litigation progresses, the parties inevitably reach tax season and must determine which parent gets to claim the child/children on their taxes if they are separated, divorced, or were never married. I frequently have clients asking which parent should be entitled to claim the child/children on their taxes. Unfortunately, there is no concrete answer as it should be determined on a case by case basis. Because of this, it is important to have your attorney investigate all of the issues in your case and advise you accordingly.
Last year's deduction per child was $3,800. Additionally, the IRS offered a $1,000 tax credit per child for certain qualifying taxpayers. Obviously, these two deductions or credits can have a substantial impact on your tax burden from year to year and determining which parent should claim the child/children is important in maximizing the benefit the parties receive.
As a general rule of thumb, absent an agreement to the contrary, the parent who has primary physical custody of the child/children is entitled to claim the child/children as a dependent for tax purposes. Usually, it is easy to determine which parent is the custodial parent. However, in cases where the parties have shared custody, the IRS has specific guidelines to determine which parent should claim the child/children on their tax return.
As I mentioned above, there can be special agreements between the parents as to who will claim the child on the taxes. For example, the parties may agree to split the children (if there is more than one) and each claim one or more child/children on their taxes. Or, the parties can agree that they will alternate claiming the child/children on a year to year basis. If you choose to come to an agreement, you must adhere to a very specific set of IRS rules and submit the appropriate paperwork.
Because the tax implications of claiming your children can be significant, it is important to consult with an experienced attorney prior to filing your taxes if you are separated or going through a divorce. It is not only important to do so to maximize your potential return, but it is also important to make sure you don't open yourself up to audit.