Clients often come to Cohen Family Law wondering who can claim a child on their taxes after a divorce. While the child custody arrangements outlined in the divorce settlement or judgment will provide guidance, you must also consider Internal Revenue Service (IRS) rules.
If you are considering divorce and have questions about claiming a child on your taxes, our experienced Arizona divorce attorney can help. Contact our Phoenix office today for a consultation.
The Benefits of Claiming a Child on Your Taxes
Raising children in Arizona and around the country is expensive. For this reason, federal tax law offers parents a variety of tax credits that could reduce their tax liability, including:
- The child tax credit
- Additional child tax credit
- Earned income credit
- Dependent care expenses
- Head of household filing status
The Child Tax Credit
Changes to the Internal Revenue Code implemented under the Tax Cuts and Jobs Act of 2018 doubled the child tax credit amount from $1,000 to $2,000 per child. The tax credit will reduce your tax liability but will not result in a refund. To qualify, your child must be a dependent according to IRS rules.
Additional Child Tax Credit
Parents with lower income can also apply for the Additional Child Tax Credit (ACTC). This tax credit is available to those who claim the child tax credit but do not use the entire $2000 benefit. Eligible parents can receive a refund of up to $1400 per child. The ACTC is only available if the refund is at least 15 percent of their taxable earned income.
Earned Income Credit
The Earned Income Credit (EIC) is available to parents (and non-parents) who work and meet adjusted gross income and credit limits. The EIC may reduce the amount of taxes you owe. Visit the IRS website to determine whether you qualify.
Child and Dependent Care Expenses
You may also be able to claim a child’s daycare or other work-related expenses. Only custodial parents qualify for care expenses credits, but they must demonstrate that the child lived with them for at least six months of the year.
Head of Household
After a divorce, parents may qualify to change their filing status to head-of-household. To claim head-of-household status, you must:
- Be legally single
- Pay more than half of household expenses
- Have either a qualified dependent living with you for at least half the year or a parent for whom you pay more than half their living expenses
Also, your spouse must not have lived in your home for the last 6 months of the year. By filing as head-of-household, your tax rate will be lower than if you file as “single.” You will also receive a higher standard deduction.
How to Claim Children on Taxes After a Divorce
In cases where one parent has custody, that parent is eligible to claim the child on their income tax return. If the noncustodial parent wants to claim an exemption for the child, the custodial parent must release rights to the credit by completing IRS form 8332.
If the parents share custody, the child custody or divorce order will specify which parent can claim the child. Parents with joint custody arrangements often alternate the tax credits. For example, one parent will claim the child in even tax years, and the other parent will claim the child in odd tax years. If there are multiple children, parents may agree to split the tax benefits for the children. For example, if you have two children, each parent can claim one child.
Because the child will likely live with the custodial parent for more than 6 months of the year, the other parent will not qualify for childcare coverage credits, head-of-household filing status, or the EIC (unless they meet the IRS requirements for that credit).
Why You Need An Experienced Divorce Attorney
Given the income tax implications of a divorce involving children, having proper legal advice is essential. That’s where the divorce attorneys at Cohen Family Law can help. We will work with you to negotiate child custody arrangements, arrive at a parenting plan, and address the relevant tax issues. As experienced mediators, we work with clients to reach amicable agreements and avoid divorce litigation. But we are always prepared to go to trial if necessary. Once your divorce is final, we can also refer you to qualified tax specialists who can assist you with claiming a child on taxes and completing the required IRS forms.
Contact Our Experienced Arizona Divorce Lawyer
If you have questions about divorce and claiming your children on taxes, turn to Cohen Family Law. You can depend on our attorneys to provide compassionate, efficient representation, protect your interests, and help you plan for the next chapter in your life. Contact us today to learn how we can help.