Children require a lot of time and parental investment. From spending half of your paycheck on a down payment for braces to committing your Saturdays to middle school robotics competitions, you make a lot of sacrifices for your children. They repay you with their love and by growing into contributing members of society.
Society rewards you for raising children by offering a few tax benefits. Parents can claim their children when filing their taxes and reduce what they owe the government by thousands of dollars per child. Divorce inevitably complicates your tax circumstances. Each of you will file as the head of your own household beginning the year after the courts finalize your divorce.
Which one of you can claim the tax credits and exemptions for your children when you file taxes separately?
Your parenting plan should talk about your taxes
When you create a parenting plan in mediation or a judge creates one in a litigated case, your parenting plan should address all of the likely issues that will arise for the family with shared custody. It won’t just talk about how you divide parenting time but how you divide other obligations to your children.
Typically, this will include rules about who can claim the children for income tax purposes. Only one parent has that right. Some families with two working parents will alternate years for claiming the kids. In families where one parent has far more time with the children, they may claim the children every year. Sometimes, the parent who has more time with the children will let their ex claim the kids because of their higher income and taxes.
When it comes to the recent tax credits, the parents who can declare themselves the head of the household with the children that year is the one who should get the credit. Many parents received advance payments for this credit in 2021. You may need to double-check with your ex about whether they received payment last year before filing your most recent tax return.
What if there are issues?
Unfortunately, you could run into a disagreement about tax credits for your children or have a big change in household circumstances. If you need to update your approach to taxes and other parental responsibilities, you may need to go back to court for a custody modification.
Thinking about the long-term impact of the changes divorce creates for your family will lead to an easier and better managed divorce process.