Who Gets to Claim the Children on Income Taxes When You are Divorced?
10 January 2018IN: Family Law
The dependency tax exemption is a significant financial benefit. Find out what happens to it after divorce
Only one parent is able to claim the dependency tax exemption each year. Additionally, the IRS will not allow divorced or legally separated parents to split the dependency exemption. So, what does this mean for divorced couples? Who gets access to this significant financial benefit? Make sure you know your legal rights to using or not using the dependent tax exemption for any children resulting from your former marriage.
First and foremost, know that, without an agreement or court order stating otherwise, the primary residential parent for the children has the right to claim the dependency tax exemption on their federal tax return. Generally speaking, this will also be the parent who receives child support payments. IRS policy considers the custodial parent the one with the right to claim the exemption. The custodial or primary residential parent is the parent that has the child living with him or her for the majority of the year.
Despite not being the primary residential parent, a former spouse may still be granted access to the dependency tax exemption provided certain requirements be met. To be able to claim the exemption, the non-custodial parent must:
- Have the custodial parent complete and sign an IRS Form 8332 (Release/Revocation of Claim to Exemption for Child by Custodial Parent);
- Attach the completed and signed IRS Form 8332 to his or her tax return; and
- File the return and attached form.
There are a few caveats that come with this ability for the non-custodial parent to claim the dependency tax exemption. Having the ability to claim the dependency tax exemption does not mean the non-custodial parent may claim head of household filing status. It does not mean he or she may claim dependent care expenses or the health coverage tax credit. Additionally, it does not mean that the non-custodial parent will be able to claim the dependency tax exemption indefinitely. Each year, the custodial parent is well within his or her rights to revoke IRS Form 8332 and claim the dependency tax exemption.
If there is a finalized divorce agreement in place, you and your spouse are bound to follow it. The parenting plan incident to the final divorce decree should specifically state who gets to claim the dependency exemption each year. While parenting plans may be amended, it is better to take great care with these types of decisions up front. Consult with knowledgeable divorce Attorney David L. Scott to weigh all of your options as you move through the divorce process. Divorce can have substantial impacts on both your short and long term finances. Don’t leave anything to chance, speak with an experienced Tennessee divorce attorney for guidance and answers to all your divorce questions.