Are you considering filing for divorce, or have you already divorced your spouse in California? If so, you might wonder how your taxes will be impacted, particularly when claiming your children as dependents.
Here, we’ll discuss who is eligible to claim children as dependents and the benefits of being able to do so in California.
What Benefits Are There in Claiming My Child as a Dependent?
Each child may only be claimed by one parent at tax time each year. The two parents may not “split” the dependency exemption in the same calendar year. As you might or might not be aware, there are some significant tax benefits to claiming your child as a dependent, which could include:
- The exemption for the child
- Head of household filing status
- Child tax credit
- Child and dependent care credit
- Education credit or education expense deductions
- Earned income credit
When determining who is eligible to claim a child as a dependent, no two situations are entirely the same for divorced parents. Here are some common scenarios:
Only One Parent Has Physical Custody
The Internal Revenue Service (IRS) typically allows the parent with physical custody to claim the tax exemption for the child or children. In California, the only exception is if the custodial parent agrees to relinquish these rights and completes IRS Form 8332.
Both Parents Share Joint Custody
When two parents share physical custody in California, the parent with whom the child or children spend the most nights out of the year will likely be eligible to claim the tax exemption. If the child spends six months with each parent, the exemption goes to the parent with the higher adjusted gross income. This means that the parent who can claim the exemption may change yearly.
Divorce Decrees and Claiming a Dependent
In some instances, divorcing spouses may agree to share the tax benefit of claiming a child as a dependent. For example, if there is only one child, the parents may include in their divorce decree an agreement that each parent will claim the child as a dependent every other year. If there are two children, the parents might agree to each claim one child as a dependent – possibly switching each year.
While these agreements might seem fair and amicable, they will not hold up under the law if one parent realizes they are entitled to claim the child as a dependent every year. Regardless of what is written into the divorce decree, IRS tax laws take precedence over county or state court orders.
Tax Deductions and Child Support Payments
A typical misconception is that a noncustodial parent who pays child support may claim the child as their dependent and, thus, benefit from that tax deduction. This is not true. As discussed above, tax laws supersede divorce decrees. Child support payments are irrelevant to determining who can legally claim a child as a dependent.
Seek Advice from a Skilled Manhattan Beach Divorce and Family Law Attorney Today
Determining which parent is entitled to their child’s tax deduction is just one of the myriad issues divorced couples must work through and resolve. Manhattan Beach family attorney Baden Mansfield has more than 30 years of experience helping people like you resolve tax and child custody issues. He has specific experience handling complex financial matters in divorce and will be ready to put his skills and resources to work for you.
Call our firm or reach out to us online for a confidential consultation to discuss the specifics of your situation today.