By Amanda Vann, Esq., 301-563-6685
For many parents, filing a tax return can be a headache. That headache can become a migraine for those who are separated or divorced because of the additional questions and issues that arise over which parent gets to claim the child(ren) on their taxes. Parents also wonder, can both parents file head of household if each parent is claiming one child?
Parents should look to any court orders or custody agreements they reached for information on whom can claim the child as a dependent on their taxes. But it’s important to remember that the IRS isn’t concerned with what your court order or custody agreement says when you file your taxes. The IRS wants to know who is the custodial parent.
Before a parent can claim a child as a tax dependent, the IRS requires you to determine which parent is the custodial parent. According to the IRS, the custodial parent is the parent who the child lived for the longer period of time during the tax year. Only the custodial parent may claim the child as a tax dependent and file as head of household.
But what happens when both parents share joint custody of a child and split the custody time equally, 50/50, then who is the custodial parent for tax purposes? According to the IRS, if the child lives with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income. Only that parent may file with the head of household status.
What happens if the parents agree to rotate each year so that both parents can claim the child regardless of whom the child resided with most in a year. In this situation, the IRS allows the custodial parent to release a claim to exemption for the child so that the noncustodial parent can claim an exemption. This is typically done by completing IRS Form 8332.
Tax exemptions become even more complicated for parents who have two or more children, and each parent agrees to claim at least one child to allow both parents to file the exemption. It would be best if you remembered that you both cannot file as head of household. In this situation, both parents may claim one or more of the children as tax-dependent, but only one parent may file as head of household.
It is best practice to state within your custody agreement which parent can claim a child as a tax dependent and which parent may file as head of household each year to avoid confusion and tax audits. Clearly stating which parents can claim the child will prevent future headaches because the agreement will assist both parents in ensuring you are compliant with the tax laws.
Finally, it is also important to remember that as of January 1, 2019, alimony payments are no longer deductible from the income of the paying spouse. Additionally, alimony received is no longer included in the income of the receiving spouse. This also applies to any agreements executed before December 31, 208, but modified thereafter, provided the modification changes the terms of the maintenance payments and states that the maintenance is not deducible by the payor or included as income to the receiving spouse.
Andalman & Flynn, P.C. serves clients throughout Maryland and the District of Columbia, offering compassionate, quality service and results-driven representation across a broad range of legal areas. With a concentration on disability benefits law and family law, the firm focuses on cases that impact the rights of everyone, and they are there for clients when responsive legal help is most critical. For more information about Andalman & Flynn, please visit our website or call 301.563.6685.