Claiming a Dependent on your Income Tax Return

It is that time of year again – time to start compiling your receipts, W-2s, deductions, and payroll information in order to file your income tax returns.  If you are expecting a return, this tends to be a joyous time.  On the flip side, if you typically owe money, this can dredge up feelings of anxiety and stress.  Either way, your taxes must be filed and rules must be adhered to.

While this office does not give tax advice – we leave that to qualified, Certified Public Accountants – we realize there are many questions that arise regarding divorce and who can claim children as an exemption on their income tax return.  What if you have a dependent child or children and you are now divorced.  Which parent claims the deduction for the child?  Typically, the parent who spends the most time with the child will claim the child as a dependent on their income tax returns.  If child time is split on a 50/50 basis, the parent with the highest adjusted gross income will most likely claim the child.  A specific form provided by the IRS can also be executed allowing the non-custodial parent to claim the child.  Solutions can also be more creative.  For example, if you have two or more children, you can work out with your ex-spouse splitting of who will claim the child; perhaps each parent claims one child.  Another option may be to alternate years as to which parent will the child on their income tax return.

The foregoing issues can be addressed and worked out in your Decree of Divorce.  By addressing these issues, and knowing typical outcomes, future confrontations may be avoided.  Too, the more information you have, the better position you will be in to make decisions.  If you are going through a divorce, it is important to consider these options and address them in your Divorce Decree.  The IRS will not assist you in a domestic altercation with your ex-spouse.

This past year of child deductions and credits were compounded by economic stimulus payments granted due to COVID-19.  Those who qualified for the stimulus payment were given additional credit for dependent children.  Generally speaking, the portion of the stimulus payment received for a dependent child was issued to the parent who claimed the child on their 2018 and 2019 income tax returns.   Given the current pandemic and recently issued payments, the controversies surrounding this are newly emerging issues in the court system.  The outcome may be dependent on who had the responsibility of supporting the child during the pandemic.    It is always best to seek the advice of a skilled divorce attorney and certified public accountant.

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