Divorce is a stressful and tumultuous time that uproots parents and children from their regular routines. While parents make great efforts to maintain as much normalcy as possible in the face of adversity and change, they need to prepare for many new challenges, particularly in the area of finances. At tax time, one of the new questions that arises is who can claim children on taxes as dependents for tax credits and other benefits.
What Is a Child Tax Credit?
A child tax credit offers parents a direct decrease in the amount of taxes owed to the federal government. Under former tax laws, parents could claim a deduction for dependent children, which reduced their amount of taxable income. While this exemption deduction is gone, the child tax credit can provide even greater savings. Parents may also be able to claim other tax benefits associated with children, such as a credit for child care expenses.
Claiming Children After Divorce in Nevada
Parents should reach an agreement on tax benefits as part of the negotiations around their divorce settlement. If there is no agreement in place and the court has not stipulated otherwise, then generally the custodial parent has the right to claim child tax benefits such as the child tax credit and child care tax credit.
The custodial parent can sign a written declaration that provides the non-custodial parent the right to claim the child. If the non-custodial parent claims the child, the other parent must sign Form 8332 to release their claim for the child, and the parent claiming benefits must include that form with their tax return.
Who is the Custodial Parent?
The custodial parent is the parent with whom the child resides most of the year. The divorce decree typically specifies who the custodial parent is.
What Benefits Can a Parent Claim on Taxes After Divorce
There are numerous divorce-related considerations that a parent must make after a divorce. Two of those decisions pertain to claiming dependents and filing status.
First, one, and only one parent can claim a single child as a dependent for child tax credits. A parent can claim a child as a dependent if the child:
- Is under age 19 (or age 24 for full-time students) unless there is a disability
- Is related to the taxpayer
- Lives with the taxpayer for a majority of the year
Second, one parent can claim head of household tax filing status, which generally offers a lower tax rate and also provides a much higher standard deduction. To file as Head of Household, you must meet the following requirements:
- File a separate tax return from your ex-spouse
- Pay more than half the cost of maintaining your house for the tax year
- Live more than half the year with a dependent child or provide support to a qualifying adult
- Be considered “unmarried” on the last day of the tax year
If parents have more than one child together, they can each claim the benefits for one child and effectively share the benefits. They may not share the benefit for the same child, however.
Help Negotiating Child Tax Arrangements
You deserve to have allies on your side to help you navigate the challenges during the trying time of divorce, including allocation of tax benefits. The passionate team of attorneys at Naimi Family Law Group would be happy to answer your legal and divorce-related questions or represent your interest in negotiations or in court. Contact us today to learn more.