Who Gets to Claim the Kids on Taxes After a Divorce?

Who Gets to Claim the Children when Individually Filing Taxes After Divorce?

FILING TAXES AFTER DIVORCE OR SEPARATION: WHO GETS TO CLAIM THE KIDS?
When two parents are married and file a joint tax return, both claim the children as dependents and both benefit from the exemption. However, when filing taxes after divorce, the former spouses no longer have the option of filing a joint tax return. Even before the divorce is finalized, there are many reasons why a couple may elect to file separately. So, the question becomes: when parents file separate tax returns, who gets to claim the dependency exemption for the children?

The most important thing to remember when filing taxes after divorce or separation is that both parents cannot claim the same child on their individual tax returns. This is a red flag for the IRS and can trigger an audit. While having a dependency exemption is financially advantageous, the potential cost and turmoil associated with going through an IRS audit would certainly eclipse that benefit. For this reason, it’s extremely important that the spouses come to an agreement about who will claim the dependency exemption prior to individually filing taxes after divorce or separation.

The Dependency Exemption Belongs to the Custodial Parent

It’s logical to think that the dependency exemption follows the parent that contributes more financially. For example, if the mother is a stay-at-home-mom, the father may assume that he has the right to claim the children on his individual tax return since he pays child support and alimony. However, while this may be rational, it isn’t accurate. In fact, under IRS guidelines, the custodial parent maintains the right to claim the dependency exemption. If the non-custodial parent wishes to claim the child, he or she must attach a copy of IRS Form 8332, signed by the custodial parent, to the tax return.

A major issue is that there is often no clarity around who is, in fact, the custodial parent, especially if the spouses are only separated and share custody. By law, a judge has the power to allocate the dependency exemption, but most divorcing couples are faced with this issue long before a Judgment of Absolute Divorce is issued. For this reason, waiting for a judge to make the determination is often not wise, especially since this “limbo” state could span multiple tax years. In this situation, the spouses must come to an agreement amongst themselves prior to filing their separate tax returns, or risk facing IRS consequences. If the divorcing couple is unable to cooperate and communicate effectively, it can often be advantageous to utilize mediation to help reach an agreement.

Finding Resolution Prior to Filing Taxes After Divorce

If the parents have an equal number of overnights with the children, and the divorce has not yet been finalized, the parties must determine how the dependency exemption will be split. For instance, if there are two children, often Mom will claim one and Dad will claim the other. If there’s only one child, the parents could agree to alternate, with Dad claiming the child in even-numbered tax years and Mom claiming in odd-numbered years.

Regardless of what agreement the divorcing parents reach, it’s just important that they reach one in a timely manner. No one wants to face an IRS audit, especially in the midst of a stressful divorce. As with most issues surrounding separation and divorce, a little cooperation between spouses can go a long way in avoiding unpleasant consequences down the road. Resolving the tax issue early on tends to help set the tone for the resolution of other issues that can, and will, arise later.

If you are facing separation and divorce, contact Coover Law Firm, LLC to schedule an initial consultation in our Columbia, MD office. Howard County divorce lawyer Fred L. Coover, Esq. has been practicing family law for over 30 years and is here to answer your questions. Call us today at (410) 995-1100.

DISCLAIMER: The information in this blog post is provided for general educational & informational purposes only. It is not intended to convey legal advice or serve as a substitute for legal counsel on any subject matter. Coover Law Firm, LLC cannot provide tax advice. If you have specific tax-related questions related to filing taxes after divorce, you should seek the advice of a tax professional.