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Who can claim children as dependents following a divorce?

On Behalf of | Mar 20, 2019 | Family Law

There is no question that the end of a marriage is a significant life event. Even couples who have only been together a relatively short amount of time often have multiple decisions to make to extricate their lives from one another. Couples with children will have to continue to have a relationship, likely for the rest of their lives. One of the many important questions for couples in North Carolina who have sought a divorce involves claiming children as dependents when filing taxes.

The fight to claim a child as a dependent is an understandable one as doing so can have a significant impact on taxes. In addition to providing the ability to file as the head of the household, additional credits such as the Earned Income Tax Credit, the Child and Dependent Care Tax Credit and the Child Tax Credit can lower a person’s tax bill. The IRS has a set of rules that helps determine who will receive the credits.

For example, the IRS looks at who the children resides with the most during the year. This person is considered the custodial parent who can allow the noncustodial parent to claim the dependents by completing a form relinquishing his or her rights to claim them. If the children spend the same amount of time with each parent, the parent who has the highest adjusted gross income (AGI) is often allowed the claim with the assumption that with a larger income, that individual contributes more to raising the children. In all cases, a parent takes precedence over a nonparent; if both parties seeing the credits are nonparents, the person with the highest AGI claims the dependents.

Unfortunately, the IRS will not handle a dispute upfront. The first person who files claiming the children is given the credits. If another person files claiming them, his or her filing will be rejected, and he or she will have be contact customer service to resolve the dispute. As such, it is often helpful if parents decide who will claim the children beforehand. Because issues such as taxes may be the last thing on people’s minds as they seek the next stage in their lives in North Carolina, having an experienced professional on their side can help ensure that no important issue is overlooked during the divorce process.