After the first of the year, many people will start thinking about their taxes and putting together documentation for their accountants. If you are divorced and have children, this also includes who will claim the children on their income tax return. Your final judgment and decree should outline the specifics regarding joint children and taxes.

Exemption for Dependents

When you have children, there is an exemption available on your taxes for dependents. To claim a child as a dependent, the child must fit into one of the following criteria:

  • Under the age of 19 years old,
  • Under the age of 24 years old and a full-time student, or
  • Disabled.

The child has to have lived with you for over half the year and did not provide for more than half their own support.

In general, this means the custodial parent, or the household where the child spends the most time, would get to claim the exemption. However, a non-custodial parent can claim the exemption if your final judgment and decree allows. For parents who share custody, two common ways of dividing up exemptions  is to alternate years or split the exemptions.

Alternating Years

Some settlement agreements will incorporate tax schedules that allow each parent to alternate exemption years. For example, the custodial parent will claim the child on all even years and the non-custodial parent will claim the child on all odd years. An alternating years tax agreement can be as specific as the parties decide.

Spitting the Exemptions

Dividing up the exemptions is an option for parents with multiple joint children. This option would entail the parents splitting up the dependency exemptions between parties. For example, if parents have four joint children, one parent would claim two children and the other parent would claim two children. The caveat to this option is if it is beneficial for both parents to divide the exemptions. Consulting with a tax specialist or an accountant is the best way to insure this option is a success for both sides.

Taxes can be complicated when negotiating a settlement agreement. If you have questions about custody and taxes, contact our office today. Our attorneys are experienced in family court and are ready to assist. You can contact our office by phone at (763) 323-6555 or by submitting a contact inquiry request through our website.