As discussed in a blog post a few months ago, we discussed the ability of parents to claim a child as a tax dependency exemption following a divorce or custody proceeding. In that blog post, we discussed how parents in a divorce or custody proceeding typically agree to alternate the child dependency exemption (e.g. father gets the dependency exemption in odd tax years and mother gets the exemption in even tax years). In the event there is no agreement between the parties, or the court order is silent on the tax dependency exemption, the custodial parent claims the exemption.
However, the issue of tax dependency exemptions is different from the issue of those who gets to obtain other tax benefits.
Under the IRS Code, certain tax benefits go to the parent considered the “custodial parent”. The “custodial parent” is the parent with whom the minor child has lived the greater part of the year (determined by the number of overnights spent at one parents over the other). These tax benefits may include Head of Household filing status, Child and Dependent Care Credit, and Earned Income Credit.
While the differences between the tax dependency exemption and other tax benefits are subtle, these differences can have huge tax implications during the duration of a child’s life.
If you are going through a divorce and have a question about tax implications in a divorce, or simply want to learn more about the Minnesota divorce attorneys at Clausen & Hassan, contact our office for a free consultation about your specific situation.