By Jedidiah McKeehan
When people go through a divorce, one question that comes up is, “who gets to claim the kids on their taxes?”
When someone is asking that question, they already understand that when they claim dependents on their tax returns, they will realize a greater savings or return in taxes. A dependent is someone who the person filing taxes financially supports.
If someone claimed a child on their taxes as a dependent, that reduced their taxable income by $4,050.00, lowering their tax liability.
After a divorce, parties often alternated who would claim the children each year, or they would split up which children are claimed by which parent.
The last two years the tax law has changed so a greater discussion is required about who is claiming children on their taxes after a divorce.
Now, you cannot just put down which child is claimed by which parent. There are three separate tax credits/designations related to children that need to be addressed. They are: Head of Household, Child Tax Credit, and Dependent Care Credit. I have a very limited knowledge of tax law, but let’s go over the basics regarding these three items.
First is the Head of Household designation. You can file as Head of Household if you have the child more than half of the time during the year. If the parents have the child for an equal period than they will need to negotiate and determine who will use this designation or if they will take turns doing so.
Next is the Child Tax Credit. This is the credit most similar to the old way that dependents were listed on taxes. Either parents can claim this credit regardless of how much time they have with the child during the year. It is important that this credit is addressed in the divorce so there is not an argument about who will claim this credit in various years.
The Dependent Care Credit is a credit that only the parent with more time with the children can claim and it is a credit you only receive for work-related child-care. So for a parent to claim this credit, they must have the child the majority of the time, and also must be paying child-care costs. If there is no child-care cost, then this credit cannot be claimed by either party. Or, if the parent with less time is the one paying the child-care cost, again, this credit cannot be claimed.
If you are in a position where you are trying to determine how to claim your children on your taxes after your divorce, familiarize yourself with these three designation/listings.
Jedidiah McKeehan is an attorney practicing in Knox County and surrounding counties. He works in many areas, including personal injury, divorce and custody, criminal and landlord-tenant law. Visit attorney-knoxville.com for more information about this legal issue and other legal issues.