Divorcing couples often have questions about who claims a child on their taxes after a divorce. With the help of an experienced divorce attorney, you can understand the applicable IRS rules and structure flexibility in your child custody arrangements.
At Aiello & DiFalco LLP, we regularly advise clients on the tax consequences of a divorce involving minor children. If you are considering divorce and have questions about claiming a child on your taxes, we can help. Contact our office today for a consultation. We represent clients throughout Long Island and New York City.
What You Need To Know About Child Tax Credits
Because raising children is expensive, federal tax law offers parents several tax credits to reduce their tax liability, including:
- The child tax credit
- Additional child tax credit
- Earned income credit
- Dependent care expenses
- Head of household filing status
The Child Tax Credit
To qualify for the child tax credit, your child must be a dependent according to IRS rules, and you must meet the related tests to claim the credit for child and dependent care expenses. Under current law, parents can claim a child tax credit of up to $2,000 per child under the age of 17. While the tax credit will reduce your liability, it will not result in a refund.
Additional Child Tax Credit
Lower-income parents may also be eligible for the Additional Child Tax Credit (ACTC), which is available to parents who claim the child tax credit but do not use the entire $2,000 benefit. The ACTC provides qualifying parents a refund of up to $1,400 per child, but this credit is only available if the refund is at least 15 percent of their taxable earned income.
Earned Income Credit
The Earned Income Credit (EIC) is available to individuals (parents and non-parents) who work and meet income and credit limits. This tax credit may reduce the amount of income tax you owe.
Child and Dependent Care Expenses
You may also be able to claim a child’s daycare or other work-related expenses. Only custodial parents qualify for care expenses credits, but they must demonstrate that the child lived with them for at least six months of the year.
Head of Household
Parents may be able to change their tax filing status to head-of-household after a divorce. To qualify, you must meet the following conditions:
- Be legally single
- Pay more than half of household expenses
- Have a qualified dependent living with you for at least half the year
In addition, your spouse must not have lived in your home for the last 6 months of the year. Filing as head-of-household means your tax rate will be lower than if you file as “single.”
How to Claim Children on Taxes After a Divorce
The child custody agreement determines who can claim the child on taxes after a divorce. Generally, the parent with primary custody can claim the child on their annual income tax return. However, the noncustodial parent can claim an exemption for the child if the custodial parent releases their rights to the credit by filing the required IRS form.
In cases where parents share custody, the child custody agreement will spell out which parent can claim the child on their taxes. It is common for parents with joint custody arrangements to alternate tax credits, with one parent claiming the child in even tax years and the other claiming the child in odd tax years. Similarly, parents with multiple children often agree to split the tax benefits for the children. For example, if the parents have two children, each parent will claim one child.
In most cases, however, the child will likely live with the custodial parent for more than 6 months of the year. Therefore, the other parent will not qualify for head-of-household status, childcare coverage credits, or earned income credits.
How Aiello & DiFalco Can Help
When you work with us, we will help you navigate the tax consequences of a divorce involving children. When negotiating child custody agreements and resolving relevant tax issues, we encourage clients to reach amicable agreements and avoid litigation. We regularly collaborate with qualified tax experts who can assist you with claiming your child on your income tax return and completing the related IRS tax form once your divorce is final.
Contact Our Experienced Long Island Divorce Lawyer
If you have questions about claiming your children on taxes after a divorce, you need the informed representation we provide. We are not only knowledgeable attorneys but also compassionate people who care about our clients. Contact us today to start planning for the next chapter in your life.