Parents of minor children who are getting divorced in Illinois have so many things they need to take care of before the final divorce verdict is handed down. In addition to issues of property division, spousal support, and child support, they must create a workable parenting plan and make significant adjustments in their living arrangements. It is no wonder that in the chaos and difficulty of making sure the children are well cared for and adjusted that sometimes little details slip by unnoticed.
One area that many divorced parents might leave unaddressed is whether one specific parent has the right to claim their children as a tax dependent on their tax returns in the future. While this may seem like a minor detail, it can have significant financial implications and, if done incorrectly, may have legal implications as well. Read on to learn about how you can resolve this important issue.
Child Tax Exemptions and Divorce
The right to claim a child as a dependent can have a significant impact on the amount of taxes a parent pays in the future. Each child can only be claimed once, so it is important for parents to negotiate this issue as part of the broader divorce decree. Both parents claiming a child can result in tax delays, audits, and even penalties for breaking tax law.
Parents can negotiate claiming their dependent children in whichever way they wish, as long as both parents agree. One parent may claim certain children, while the other claims the rest; likewise, parents may switch claiming their children every other year. A parent may be willing to give up claiming the children as dependents entirely in exchange for some other favorable financial arrangement, such as higher child support or spousal support payments.
Other tax benefits, like the Child Tax Credit, can also make a major difference to a family’s financial well-being. Generally speaking, the parent with the majority of parenting time (the parent with whom a child lives for more than half a year) can claim the Child Tax Credit, but again, this is subject to negotiation and should be addressed in the divorce decree. If a parent is seeking an advance credit using the Child Tax Credit, however, it can only go to the parent who claimed the child as a dependent in the previous tax year and who will claim the child in the current year’s tax filing as well.
Meet with a DuPage County Divorce Lawyer
At MKFM Law, we want to make sure that your divorce planning process leaves no stone unturned. To avoid unpleasant surprises down the road, we will work closely with you to make sure your questions are answered and that important issues like taxes are addressed head-on. Call our offices today at 630-665-7300 to schedule a consultation with our experienced Wheaton, IL divorce attorneys.