Divorce and Taxes: Who Gets to Claim the Kids?
Understanding tax implications due to your divorce can be confusing. When you choose the collaborative divorce process or mediation, you and your spouse will work with a team of divorce professionals, specifically a financial neutral or mediator who can help you and your ex navigate the huge ocean of taxes.
One common question my clients ask during the divorce process is who can claim the child tax credit after the divorce is finalized. The answer isn’t always straightforward.
Usually, the parent who has the child in their physical custody for over 50% of the time can claim the child on their tax return, or based on whichever parent the child stayed with the most.
However, things can get more complicated if the divorce agreement specifies otherwise. For instance, parents with joint custody may agree to alternate claiming the child tax credit each year. Still, this arrangement must be legally documented in the final divorce agreement to be valid.
We like to share with our clients that only one parent can claim the child tax credit per year, this avoids both parents claiming it simultaneously. And also remember that tax changes due to the divorce do not start until the divorce is finalized.
The more details you can work out and include in your written divorce agreement, the less confusion, stress, and potential issues will arise. An excellent benefit of collaborative divorce is that more options are available than a court-litigated divorce.
The Collaborative Practice of San Diego is a nonprofit, multi-disciplinary referral network of independent professionals of attorneys, mental health professionals and financial advisors working together to learn, practice, and promote Collaborative processes for problem-solving and the peaceful resolution of family law issues in regard to co-parenting, with an eye toward preserving the emotional, as well as the financial and tax issues of the family.
Contact us today to learn how to develop a separation agreement that can be mutually agreed upon by both of you and will consider how your taxes will be impacted!
Note: This information is general in nature and should not be construed as legal/financial/tax/or medical advice. You should work with your attorney, financial, medical or tax professional to determine what will work best for your situation.
