With tax season upon us, there are many questions regarding tax issues that arise as a result of a divorce. A common question is which parent gets to claim the child or children as a tax exemption when they file their tax return? According to federal law, the parent that has the child the majority of the time (51% or more) gets to claim the children. If the custodial parent allows the other parent to claim a child or children, the custodial parent should file IRS form 8332 “Release of Claim to Exemption for Child by Custodial Parent.
Despite the law regarding which parent claims the exemption, there are times when it may be beneficial for the noncustodial parent to claim the exemption. If the custodial parent has little to no income, the exemption is useless and therefore is more beneficial for both parties if the noncustodial parent takes the exemption. By doing so, it will generally increase the guideline child support amount the custodial parent will receive because he or she is not claiming the child. In this type of situation it is a “win-win” for both parties. The noncustodial parent gets to claim the children and the custodial parent gets more child support. As stated previously, the custodial parent can always allow the noncustodial parent to claim the children. Sometimes the decision to allow this is weighing the benefit have having more child support on a monthly basis or getting the tax exemption when he or she files taxes.
In situations when it is a true 50/50 custody arrangement the court will many times alternate the claiming of the exemption if there is one child or allow each parent to claim a child if there are more than one child. Once again, whether these scenarios are advantageous depends on the incomes of each party.
In deciding whether to allow the noncustodial parent to claim the child or children as an exemption, one should consult his or her tax preparer to determine the best course of action.
DISCLAIMER: The above article is intended for informational and educational use only and is in no way intended to be legal advice. If legal advice is needed, you should consult an attorney.
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