It’s tax time! Do you know who will be claiming the children as dependents?
Right after Christmas and Hanukkah, the thoughts of parents who are experiencing custody issues turn from holiday visitation and schedules to tax matters. Which parent gets to claim the children as dependents and thereby reap the benefits of a tax deduction and tax credits?
I always advise clients to seek the advice of a tax accountant in matters regarding the filing of tax returns and nothing in this article should be considered or is intended to be legal or tax advice.
Every separation and divorce is different and each case requires advice that is individualized to your unique situation.
Nonetheless, a parent who is divorced or separated needs to be aware early in the process of separation and divorce that issues regarding claiming children as dependents are important.
Tax matters should ideally be addressed by the parents well before tax season is upon them. No one wants to end up with an inquiry from the IRS as a result of both parents claiming the children on their tax returns.
As a very general rule of thumb, the parent who has the children or child more than half the year (a majority of the year) is the one entitled to claim the children as dependents, subject to many other requirements in the tax code and absent an agreement between the parents to the contrary.
Please consult your tax advisor to see if the above statement pertains to your situation.
Sometimes, however, the parent who is able to claim the children as dependents will not benefit from it or will not benefit as much from it as the other parent would.
The custodial parent, for example, may not earn enough income to benefit from claiming the children as dependents on her tax return. In those cases, a custodial parent may want to consider signing an exemption allowing the non-custodial parent to claim the children in exchange for other concessions in the divorce settlement or separation agreement that may be more beneficial to the custodial parent.
Bargaining well is essential in these cases to maximize your financial settlement in the divorce.
Your lawyer, in conjunction with your tax accountant, can help you achieve the best possible financial outcome in your separation or divorce.
Contact us today to set up your consultation.
We provide attorney services to serve parents in Monroe, Matthews, and Charlotte, North Carolina as well as those in the greater Union County, NC area and the greater Mecklenburg County, NC area.