Taxes and Dependents

Divorce or separation can be a difficult and complicated process.  There are many important considerations, not least of which is what type of parenting schedule will be best for the children you share with your spouse or partner.  One of the more challenging aspects of settling your parenting issues or even getting it ready for trial is taxes.  There have been changes with the Tax Cuts and Jobs Act concerning how taxes treat dependents on our taxes, and if you are facing divorce or separation, it is essential you understand these changes and how they could impact your finances and tax filings.

One important aspect of your taxes filing your divorce is whether you can file as head of household.  This can give you significant tax advantages.  The answer to whether you can claim this status depends on the custody agreement.  If the child lives more than half the time with you, then you may file with the head of household status. Conversely, if the child lives the majority of the time with the other parent, then that parent claims the status.  If the child lives equally with both of you, neither of you may claim the status.  The important exception to this rule is if the custody order specifically states that one of you may claim the head of household status.  Make sure you carefully review your custody documents before deciding that you may or may not claim head of household.

Another important consideration regarding taxes and dependents is who may claim the child as a dependent on taxes.  Again, this will be determined by the custody order.  More often than not, your custody order will contain specific language about who may claim the child in which years.  If you are paying child support, it is likely you are able to alternate years, but, again, refer to your order.  Be aware that the Tax Cuts and Jobs Act eliminated the child dependency exemption, which can have a big impact on your taxes.

Many clients also ask whether they can deduct their child support payments from their federal taxes.  The answer to this is a resounding, “no.”  That said, the person receiving child support does not claim the child support as income.

If you have questions about family law and taxes, call us today at 651-413-9568.  We can talk to you about your family and how we can help you.