By: Amanda Vann, Esq.
For many of us, filing a tax return can be a headache. But those who are separated or divorced and with children have extra questions to deal with—such as which parent gets to claim the child and can both parents file as head of household, if each parent is claiming one child?
Many times, parents have a custody agreement, whether it’s one they agreed to themselves or an arrangement created by a court. That agreement can address how the parents will file their taxes and which parent gets to claim the child as a tax dependent. But it’s important to remember that the IRS isn’t concerned with what your custody agreement says when you file your taxes. The IRS wants to know who the custodial parent is.
If you’re looking for Maryland child custody lawyers that are dedicated and experienced in all aspects of family law, call us today. We are more than happy to answer any questions you may have regarding child custody.
Claiming Children as Dependents
Children of Divorced Parents
Children of divorced parents are usually dependents of the custodial parent. However, there are exceptions. The custodial parent can release the exemption to his or her ex-spouse by signing a written declaration (Form 8332) that the noncustodial spouse must attach to the tax return each year he or she claims the children as dependents. Or if your divorce decree gives your ex-spouse the right to claim the children, he can do so if he attaches key pages of that document to his tax return. Otherwise, you get to claim the children as your dependents.
Children of Separated Parents
It’s up to you and your spouse. You might decide that the parent who gets the biggest tax benefit (the one in the higher tax bracket) should claim the exemption. If you can’t agree, however, the exemption goes to the spouse with whom the child lived with more because they are deemed the custodial parent.
It’s up to you and your partner. Since he or she is a qualifying child for each of you, either parent may claim the child as a dependent. If you can’t decide, the exemption goes to whichever of you reports the higher Adjusted Gross Income on your separate tax return.
For more information concerning tax rules for claiming dependents, click here.
The Custodial Parent & Child Tax Credit
Before you can claim the child tax credit, 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 spent the most number of nights with over the past 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 actually split the 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 head of household status.
The question becomes even more complicated for parents who have two or more children when each parent agrees to claim at least one child to allow them both the child tax credit. You must remember that you both cannot file as head of household. In this situation, both parents may claim one or more children as tax dependents, but only one parent may file as head of household.
Click here for child custody tips from the child custody attorneys at Andalman & Flynn.
Make Your Custody Agreement Clear
It is a good idea to state within your custody agreement which parent can claim a child tax credit and which parent may file as head of household. These clearly defined arrangements can give a parent with a lesser income the right to claim the child tax credit. Provided the parties abide by the custody agreement, it will also prevent future headaches by assisting both parents in ensuring compliance with Maryland and federal laws. So, be careful if you split visitation and custody time equally, 50/50. Make sure you are correct in filing as head of household status, because if not, you can assure an audit is not too far away.
Get Help from the Child Custody Lawyers at Andalman & Flynn in Maryland
If you have any questions on how to properly navigate custody issues or separation agreements in Maryland, contact Andalman & Flynn. We are located in the Montgomery County area and can provide consultations by phone for your convenience.