Tax season is here, so which parent gets to claim the kids if divorced?

March 25, 2014

Tax season is here, so which parent gets to claim the kids if divorced?

Article provided by Mullins Law Firm

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With April 15 just weeks away, tax season is indeed in full swing. However, as people begin to wade through the myriad of tax laws and regulations as they prepare their returns, there is one question specific to divorced parents that must be answered: Who gets to claim the dependency exemption for the children? The resolution of this particular matter can have significant financial implications for the parents, especially given the fact that the more exemptions a person can claim, the smaller his or her tax liability will be.

Under the federal tax code, if parents are divorced, the custodial parent is typically the one that is able to claim minor children on his or her tax return. However, while in years past it may have been easier to identify the custodial parent, it is often much more difficult today given the push in many states for parents to share custody.

For instance, in a state like Nevada, child custody laws encourage parents to share the rights and responsibilities of child rearing following divorce. In fact, there is a legal presumption under Nevada law that joint custody will be in the best interests of a child if the parents have agreed upon joint custody.

But, if parents have joint custody, how can only one be considered the custodial parent for tax purposes? Well, in circumstances such as this, federal law dictates that the custodial parent will be the one "with whom the child resides for the greater number of nights" during the year. Thus, even if parents share joint custody, only the parent who has the child for more nights can claim the dependency exemption.

However, it is possible for the custodial parent to "release" the dependency exemption to the noncustodial parent, although this release must be properly executed. For example, the parents can agree during their divorce to allocate the exemption to one parent, regardless of whether this particular parent has the child for the majority of the year. But, in order to be enforceable, this agreement must meet the preset guidelines established by the I.R.S. - even a minor mistake can make the agreement invalid.

Legal counsel may be necessary

Accordingly, if you are currently going through a divorce and want to ensure you adequately address every important issue, including the child dependency exemption, it is often best to consult with an experienced divorce and child custody attorney. A skilled attorney can help resolve all matters and assist in drafting all required documentation.

Additionally, even if your divorce is settled, and child custody determined, a knowledgeable attorney can still help if parents are considering a modification to their child custody arrangement - particularly if this modification may have tax implications.