Tips for Separated Parents Claiming Children on a Tax Return
Divorce and custody arrangements are very complicated and emotionally trying. And if you are new to this process, you want to be mindful of the significant tax implications for separated parents who are trying to claim children on their tax returns. Here are some tips that you can follow to save yourself time, effort and a big headache!
A Child Can Only Be Claimed by One Parent
If the parents are filing taxes separately, they cannot both claim their child as a dependent. If both of you happen to file and claim the same child as a dependent, the IRS will most likely allow the exemption for the parent who the child lived with more over that year.
A non-custodial parent is the parent with whom the child lives with less than half of the time. A non-custodial parent can claim a child as a dependent and take the exemption IF the custodial parent opts not to claim the child. In this case, you should be sure to complete IRS form 8332 or have written documentation of this.
Many families with joint custody of the children choose to alternate years in which they claim the child/children as dependents. This is especially useful in cases where custody is split 50/50.
Communication is Key
While you may not want to spend any additional time communicating with your former spouse, it will save you time and potential problems with the IRS if you can find a way to communicate clearly about your tax returns, particularly about who is claiming the child/children as dependents.
Amending Your Return
If you have discovered that both you and your ex-spouse have claimed your child/children as dependents, you can amend your tax return to correct the error. Keep in mind that it is possible that this will cause you to owe more taxes (since this will increase your taxable income). You need to complete this amendment within 3 years of filing the return or within 2 years of paying the tax.
Other Things to Keep in Mind
To be considered a “qualifying child,” he or she must be under 19 years of age or 24 years old if the individual is in school full time. Also, the IRS has up to 3 years to examine or audit your return. If they find that both parents have claimed the same child(ren) (and it was not unintentional), you could receive additional penalties.
Success Tax Relief: Support If You Need It
After separating, you may decide it would be useful to have some help thinking through the tax implications of the separation. Success Tax Relief is experienced at negotiating with the IRS and other parties (when needed) to make sure that your taxes are done right. Success Tax Relief can review all of your tax and custody documentation and make a recommendation about the best way to claim your child/children each tax year. You have plenty to worry about, let us take care of this issue for you. Give us a call at 1-877-958-6638 to speak with one of our experienced tax professionals.