If you are newly divorced or separated, tax season can leave you feeling overwhelmed and full of questions you've never had to answer before. The most common ones relate to tax breaks for single parents and figuring out the current tax rules for claiming your child as a dependent. The following questions and answers can help you determine the right course of action for filing your taxes this year:
Tax Rules for Claiming Your Child as a Dependent
Question: My ex-husband and I divorced about nine months ago. My son lives with me, and I was planning to claim him on my taxes. However, my ex told me yesterday that he plans to claim our son as a dependent, too. Is that legal? What happens if we both claim him as a dependent on our taxes?
Answer: Each child can only be claimed as a dependent by one parent (except when married couples file taxes jointly). Typically, in the case of divorced, separated, or never married parents, it is the custodial parent who is legally able to claim a child as a dependent for tax purposes. In the situation you described, if you were to both claim your son as a dependent, the IRS would defer to the parent who has physical custody or with whom your child lived for more than 50% of the time.
Tax Rules for Parents Who Share 50/50 Custody
Question: What if we can't agree about who should claim our child as a dependent?
We share custody 50/50, and the time split is fairly equal. How do we decide who claims our son as a dependent and who gets the Child Tax Credit?
In cases where custody is shared equally, the Internal Revenue Service uses what are known as "tiebreaker rules for claiming dependents" to determine which parent is eligible to claim the children as dependents.
Forfeiting Your Right to Claim Your Child as a Dependent
Question: Can I forfeit my right to claim my child as a dependent? Since the kids live primarily with me, I have the right to claim them as dependents on my taxes. But my ex has had an exceptionally difficult year financially. Is there any way I can pass my 'right' to claim the kids as dependents to him?
Answer: Technically, yes. There are some exceptional situations in which a custodial parent would want to forfeit his or her right to claim a child as a dependent. To do this, you would need to fill out form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. However, I recommend that you consult with your lawyer before taking this step, to ensure that you are fully aware of any unforeseen complications or ramifications for the future.