Which parent has the right to claim the children on their taxes?
Taxes are complicated enough without the added confusion of figuring out who can legally claim the children on their taxes after divorce. Your filing status and ability to claim dependents can significantly reduce your tax liability and as a result, some parents find this to be a “hot button” issue with their ex, especially if there are no written agreements already in place. The good news is that the IRS has strict rules around who gets to claim the children after divorce as well as how you are allowed to file (single or head of household).
First, some basics. After divorce, you will likely (we are assuming you have not remarried yet) file your personal income taxes as either ‘single’ or as ‘head of household’. It is advantageous to file as head of household as you can have a lower taxable income and greater potential refund than filing as single. In addition, filing as head of household allows you to claim a roughly 50% larger standard deduction than single filers ($18,800 vs $12,550).
To file as head of household, you must be legally single, pay more than half of your household expenses, and have either a qualified dependent living with you for at least half the year (or a parent for whom you pay more than half their living arrangements). Generally, if you are the custodial parent, regardless of whether or not you have an agreement with your ex on who can claim the children as dependents (more on this later), you are the only parent that can file as head of household as it is you that the child(ren) have lived with for more than half of the year.
Let’s look at some different scenarios which may apply to you:
You are the custodial parent and you have a settlement
agreement that clearly spells out who will claim the
children on their taxes, and when.
This is fantastic, however, the IRS has a very specific requirement that you must remember to follow. If the custodial parent (in this case, you) has agreed to waive an exemption and allow the non-custodial parent to claim the child(ren) as dependents, the custodial parent (you) must sign a waiver (IRS Form 8332) and the non-custodial parent must file a copy of this signed waiver along with their return (unless your divorce was pre 2009 and the arrangement is clearly spelled out in your decree). You will still file as head of household and may be able to claim the Earned Income Credit (depending on your income) and the Child and Dependent Care Credit (Child care credit), while the non-custodial parent would claim the dependency credit and the child tax credit. (This is a general guideline and we suggest you seek the guidance of a certified tax professional when filing your taxes as your situation could be unique.)
You are the custodial parent. You don’t have an agreement
with your ex and this is your first year filing without him/her.
You found out that your ex filed as head of household and
claimed the children on his taxes.
If you have not filed your taxes yet, you will have to do so via a paper copy and send it to the IRS via regular mail, as your electronic filing will be returned to you due to the fact that someone has already claimed the dependent you are also claiming. In the near future, you will both receive a letter stating that the person who incorrectly claimed the children must file an amended return. In this case, your ex would have to file the amended return. If there is any doubt, the IRS will nearly always default to the custodial parent. Be prepared to immediately provide the IRS with the documents they require to prove your status as custodial parent.
The Dallas family law attorneys at Martin Oostdyk know what issues need to be addressed and resolved PRIOR to entering a final divorce decree. If you are considering divorce with children in Texas, we encourage you to schedule a free consultation with one of our expert family law attorneys.