Your tax return might be the last thing on your mind when you are in the middle of a divorce, but it’s important not to forget about it entirely. As a married couple, you might have filed your tax returns jointly. Now you will definitely need to start filing separate returns.
One thing to consider is who gets to claim the deduction for the children on their taxes.
Why does it matter?
There may be tax advantages available for the parent who includes the children on their tax return. For example, it could make you eligible for the Child Tax Credit, Earned Income Tax Credit and more.
Only one parent can have these advantages, so determining who that will be is an important consideration in your divorce.
You can choose who claims
If you and your spouse can decide whose tax return the children go on, the IRS would normally accept that decision. If you cannot agree, then the IRS will decide for you. They will typically award that right to the parent with whom the children spend the most time living.
There is no way to split the entitlement, but you can of course come up with some arrangement whereby the parent who is allowed to claim the tax breaks has to financially compensate the other parent in another way. If the children’s living arrangements change at any point, you can look at changing who claims for them, if appropriate.
This is just one of the many things to consider when negotiating your divorce. With legal guidance, you can learn more about the various relevant matters and make appropriate decisions.