Deciding how to claim children as dependents after divorce

On behalf of Stange Law Firm, PC posted in Family Law on Monday, March 11, 2019.

Some divorced parents in Missouri who do not discuss which one of them will claim the child as a dependent on their taxes may end up in conflict. The IRS accepts the dependent child on the return of the parent who files first and rejects the other.

In a dispute, the agency applies several criteria to determine who is eligible. Parents take precedence over anyone else in claiming the child. The parent with whom the child lives most of the time is supposed to be able to claim the child as a dependent, but if the parents share custody and do not agree on who claims the child, the IRS looks at income. The assumption is that the higher-income parent contributes more to the child’s care, so that parent is usually chosen to make the claim. This is also the criteria used for claimants who are not the parents.

The Tax Cuts and Jobs Act changed how dependents are handled on taxes beginning in 2018. While it eliminated the personal exemption, the Child Tax Credit went to $2,000 from $1,000, and the Dependent Care Credit was kept. In some cases, a custodial parent might agree to allow the other parent to claim the child as a dependent. Form 8332 allows a custodial parent to relinquish this ability for one year or longer. This form could be used if parents agree they will take turns claiming the child on taxes.

Sometimes, when parents have two children, they make an agreement in which each one claims a child. Parents may want to address other issues when they are getting a divorce as well. For example, making a plan about how the child will spend holidays and vacations in addition to the regular schedule for child custody may prevent conflict and going back to family court later.

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