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Divorce, taxes and dependents

Divorced or separated parents in Virginia may claim their children as dependents when filing taxes. However, they should be aware that if more than one taxpayer claims a kid as a dependent, the Internal Revenue Service will have to take a second look at the returns.

Including dependents on a return can have a significant impact on taxes. Taxpayers with qualified dependents can file as the head of their household, which is deemed a favorable tax filing. The taxpayers can also claim tax credits such as the Earned Income Tax Credit, the Child and Dependent Care Tax Credit and the Child Tax Credit.

Among the tax changes implemented by the Tax Cuts and Jobs Act was the elimination of the personal exemption beginning with the 2018 tax year. The legislation also doubled the Child Tax Credit to $2,000 and kept the Dependent Care Credit.

In situations in which multiple taxpayers have claimed the same dependent and there are no legal agreements (such as separation, custody or divorce agreements) that dictate who can claim the credits, the IRS will apply a series of rules to decide which claim should be accepted. These rules examine a number of factors.

The relationship between the taxpayer and the dependent is evaluated; if there are competing claims, the parents are prioritized over non-parents. The residence of the dependents is also taken into consideration; the parents whose residence the children live in for the longest period during the year will get the dependent claim.

If necessary, a divorce attorney could litigate to obtain divorce settlement terms that allow a client to claim their kids as dependents and benefit from related tax credits. The attorney may also work to resolve disputes regarding other divorce legal issues, such as child support, spousal support and visitation.