When parents share equal custody of their child after a divorce, one of the questions that frequently comes up has nothing to do with parenting time, school schedules, or holiday arrangements. Instead, it has to do with taxes. More specifically, many parents wonder who has the legal right to claim their child as a dependent when they each spend an equal amount of time raising him or her. Unfortunately, this issue is not always as straightforward as people expect.
Who Can Claim a Child as a Dependent When Custody Is Equal?
Many people assume that if custody is shared equally, each parent automatically has the same right to claim the child on his or her tax return. While that may sound fair, it is not necessarily how the law works. Rather, several different factors may come into play, and both federal tax rules and the terms of a divorce agreement should be considered before either parent files a return. Some of the most important factors include the following:
- The parent with whom the child spent the greater number of overnight stays during the tax year will generally be considered the custodial parent for federal tax purposes.
- If parenting time was truly equal, the Internal Revenue Service has tie breaker rules that may determine which parent is entitled to claim the child.
- In certain situations, the parent with the higher adjusted gross income may ultimately qualify to claim the child.
- A divorce judgment or custody agreement may provide that one parent claims the child in certain years, though additional IRS requirements may still have to be satisfied.
Simply put, every equal custody arrangement is not automatically treated the same. That is why parents should understand both their court order and the tax rules before filing.
Can Parents Alternate Who Claims the Child Each Year?
Yes. Fortunately, in many cases, parents are able to reach an agreement regarding who will claim the child from year to year. In fact, alternating tax years is fairly common, especially when parents cooperate well and wish to share the available tax benefits. A parenting agreement may provide that:
- One parent claims the child every year.
- Parents alternate claiming the child in even and odd numbered years.
- Each parent claims a different child if there is more than one qualifying child.
- Certain tax-related benefits are allocated between the parents under agreed upon terms.
That being said, parents should understand that simply agreeing to alternate years does not automatically satisfy federal tax requirements. In some cases, additional IRS forms must also be completed before the noncustodial parent may properly claim the child.
What Should Parents Do if Both Claim the Same Child?
Unfortunately, disagreements sometimes arise despite everyone’s best intentions. If both parents claim the same child on separate tax returns, the IRS will generally not allow both returns to stand without additional review. This frequently results in various issues, such as delays or requests for documentation, and sometimes even a determination that one parent improperly claimed the child. If you are unsure who should claim your child, you should do the following:
- Review your divorce judgment, custody order, or settlement agreement.
- Speak with the other parent before filing your tax return whenever possible.
- Keep accurate records regarding your parenting schedule throughout the year.
- Consult both an experienced family law attorney and a qualified tax professional if questions remain.
Ultimately, while tax issues may seem relatively minor compared to child custody or child support, they can nevertheless become a significant source of conflict after a divorce.
If you have additional questions concerning taxes or child custody, please contact a skilled divorce attorney from Lacy Katzen LLP for a consultation today.
