CHILD CUSTODY AND CLAIMING THE CHILD ON YOUR TAXES
When parents divorce, there are many concerns surrounding their children. One major issue is with whom the child will reside with and what the custody arrangement will look like.
Although it is important to address child support issues, it is also vital to understand how a custody plan could impact certain financial tasks such as filing taxes. Claiming a child on his or her taxes can be very beneficial, as it allows that parent to obtain an earned income credit and a child tax credit. Thus, divorced parents can often find themselves in a dispute over who gets to claim a child each year.
Only one parent can claim a single child as a tax dependent, which also means only one parent will reap the tax rewards while the other gets no benefits at all. In matters where there is a custodial parent or sole custody, that parent is able to claim that child each year as that child resides with just them. However, in joint custody situations, time is usually split evenly between parents, meaning the child or children live with both parents.
In a joint custody situation, divorce parents frequently alternate years for claiming a child or children on their taxes. This way each parent gets to enjoy these tax benefits every other year. In some cases, parents with multiple children will just split who they claim each year. For example, if the divorced couple has four children, each parent could claim the same two children each year.