Divorce, who gets to claim tax credits

Divorce, tax credits, tax implicationsOne of the common questions often asked by recently separated parents is, who can claim the child on their tax return and what credits they may claim. The other question is, if these tax credits can be shared. Several questions need to be answered by the parents.

The first question that must be answered is, which parent the child is spending the most number of nights with. Commonly, for tax purposes, the child is the qualifying child, of the custodial parent. The custodial parent is the one whom the child has lived the longest period-of-time with, during the calendar year. If you are not sure if you qualify as the custodial parent, the rules and definition are laid out clearly by the IRS on their web site, consult IRS publication 501.

Only one parent can claim the child as a deduction. However, there are exceptions, and a custodial parent can sign a release transferring the tax deduction to the other parent. These qualifications and exceptions are lined out in the IRS web site link https://www.eitc.irs.gov/Tax-Preparer-Toolkit/faqs/divorced. It is important to keep record of the time spent at each residence.

The divorce paper work should be very clear as to which party is going to claim the dependent, and that it is done under the IRS guidelines in the link above. A release will still be advisable because the divorce decree is not always accepted as proof for ability to claim the dependent.

There are also tax credits that must be considered: the custodial parent is always entitled to the EITC and dependent care credit, regardless of who claims the dependent. The child tax credit can only be claimed by whomever claims the dependent.

It is wise to consult your tax preparer to be sure the qualifications are met before claiming a dependent. And to consult your tax preparer early, so you have enough time to adjust or to get the proper forms completed.

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