- Only one divorced parent can claim a child as a tax dependent.
- There’s no more dependency exemption, but claiming a dependent can still come with an earned income credit and a child tax credit.
- If you have joint custody, figuring out who can claim the child on taxes can be complicated.
Divorce is always complicated, but divorce with kids is infinitely more so, especially when it comes to taxes. The main tax issue for divorced parents is claiming dependents. Although the dependency exemption was eliminated under the Tax Cuts and Jobs Act, claiming dependents comes with other benefits — including an earned income credit and a tax credit for the child — so split-up couples might find themselves arguing over who claims the child on taxes after divorce.
In these situations, only one person can claim a child as a tax dependent, per federal regulations. This means that one parent will reap the tax rewards and the other will get no benefit.
Here’s what you should know about taxes as a divorced parent.
Claiming a Child on Taxes When You’re Divorced or Separated
Knowing who claims the child on taxes when parents share custody is more complicated than sole-custody situations. If your divorce allows for joint custody and long-term vacation visits, you need to understand which parent has primary custody. Here’s more information on filing taxes after divorce.
Find Out: Is Child Support Taxable Income?
Claiming Dependents Under Joint Custody
If the terms of the divorce clearly identify a custodial parent — the parent who has primary custody of the child — that parent is legally entitled to claim the child as a dependent if the child passes some qualifying tests.
Many parents have 50-50 custody agreements but don’t have a written agreement regarding who can claim the child or children on their taxes. Whether you have primary custody or joint custody of a child after divorce, the fact remains that only one person can claim the child or children on each year’s tax forms.
A common remedy for an exemption tug-of-war is for parents to alternate years when claiming a child or children so they each get the tax benefits every other year. If you have more than one child and are wondering how many kids you can claim on your taxes, you can divvy up the responsibility and split your dependents between you. For example, if you have four children, every year you can select the same two children to claim. Tax deductions and credits will be easier to figure out this way, and you can avoid any mix-ups because you’ll do the same thing every year.
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IRS Dependent Rules
In addition to knowing whether you can make a tax claim for your child, you and your child will need to pass these IRS tests to make sure you qualify as far as the IRS is concerned:
- Relationship: The dependent must be your son, daughter or foster child; descendants such as a grandchild, brother, sister or stepsibling; or an extended descendant such as a nephew.
- Age: The child must have been under 19 years old and younger than you or have been under 24 years old, a full-time student and younger than you in 2018. You can claim a child who was permanently and totally disabled in 2018, regardless of age.
- Residency: The child must have lived with you more than 50 percent of the year.
- Support: The child must not have provided more than 50 percent of his own support over the year.
- Family Income: The child tax credit is reduced if your modified adjusted gross income is above a certain amount. The child tax credit phase-out threshold is $200,000 for married couples filing separately; $200,000 for single or head of household filers and qualifying widows or widowers; and $400,000 for married couples filing jointly. For each $1,000 of income above the threshold, your available child tax credit is reduced by $50.
The IRS can serve as a guide for claiming children on taxes. In many cases, however, the delineation isn’t so clear — especially in the case of shared custody. When you address the issue of claiming children on taxes, it’s important to research your rights and make your claim correctly. Getting over the hurdle of a divorce and determining dependency exemptions is challenging enough, so don’t invite further hardships by risking a tax audit.
Keep reading about how the child tax credit has changed under the Tax Cuts and Jobs Act.
More on Taxes
- Find Out If You Can Really Write Off That Holiday Donation
- 10 Tax Loopholes That Could Save You Thousands
- 18 Medical Expenses You Can Deduct From Your Taxes
- Watch: Why You Shouldn’t Assume You’re Getting a Tax Refund
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Gabrielle Olya contributed to the reporting for this article.