Some of the major benefits of marriage are the federal tax benefits that come along with being able to file married jointly. When a married couple shares children, the tax credits and exemptions they can claim are usually even higher and are often enough to make a significant difference in a couple’s financial situation in any given year. When a couple gets divorced, however, several questions about taxes and children arise. Unlike most questions about taxes, getting the answers to these questions is not always a simple matter of consulting an accountant because certain issues require making decisions in advance and with the approval of a court.
Which Parent Can Claim a Child as a Dependent?
Only one parent can claim a child as a tax dependent in any given year and wrongfully claiming a child as a dependent can land a parent in serious trouble with the IRS. This means it is important to proactively make an agreement with your ex during the divorce process and it is equally important to stick to the agreement, even if you dislike it. Parents may decide to switch off years during which one parent can claim all children as dependents, divide the children between themselves so each parent claims a child or two every year, or simply have one parent claim all the children every year.
Because parents are now encouraged to resolve issues involved in their divorce either together or with the help of a mediator, judges are usually less involved in deciding these questions than they have been in the past. Judges may even order feuding parents to attend sessions with a court-appointed mediator to work out differences in addressing questions of child-related taxes after divorce. Whatever agreement they come to, parents are more likely to come up with a comprehensive financial agreement they both find satisfactory if they work together, rather than relying on a judge to make the decisions for them.
Which Parent Can Claim the Child Tax Credit?
Similar to claiming a child as a dependent, the parenting plan should decide who is allowed to claim the child tax credit and any other financial assistance associated with having the child as a dependent, such as the earned income tax credit. Only one parent can claim the child tax credit for a child in a given year.
Call a Kane County, IL Divorce Lawyer
Questions about how to handle complex issues of finances, taxes, and childcare are common after divorce and deserve the help of a St. Charles, IL divorce attorney. Get the assistance you need by calling [[title]] today at [[phone]]. We offer free consultations and two convenient locations.