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How do divorced parents account for children on taxes?

On Behalf of | Dec 9, 2021 | Family Law |

When parents get divorced, there are many things they need to discuss. One of the topics that should be addressed is how to handle your children on your taxes.

When parents divorce, only one parent will be able to claim their child as a dependent on their taxes. For people who have two children, they may each claim one child if they prefer, though that is not the only way to handle the situation.

Remember that only one person can claim a single child for head of household filing status. Only one person can claim the child tax credit or dependent care credit per child.

Which parent gets to claim a child on their taxes?

Deciding which parent gets to claim a child on their taxes is important to avoid mistakes on your tax forms. Normally, the noncustodial parent claims the child tax credit, but the custodial parent claims the dependent care credit and earned income tax credit. However, you can decide to do this differently if you don’t want to apply tiebreaker rules to your divorce.

Another option that you have is to alternate claiming the earned income tax credit (EITC). This might be a part of your divorce settlement. Keep in mind that there are residency requirements that your child will need to meet for you to be able to claim this credit, so it usually works best in joint custody scenarios.

Claiming your child may be beneficial for your taxes if done right

If you are able to claim your child on your taxes correctly, then you may obtain tax breaks that you wouldn’t have otherwise. You might be able to get a larger refund or a more favorable filing status as a result of having a child to claim.

As long as both parents aren’t claiming the same credits for the same child, it’s usually acceptable in the eyes of the Internal Revenue Service. You and your ex-spouse will need to determine if one of you would be better served by claiming those credits or if there is a way to split the credits in a way that is beneficial to you both.