All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 2
Registered: ‎08-30-2017

Best option for dependents with Divorce

I have two kids 3 and 6 and I am divorce with 50/50 custody.  Currently we rotate years to count dependents.  Would it be more beneficial to split and have 1 dependent each if I were to get the youngest child?

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Tax Pro
Posts: 5,536
Registered: ‎02-23-2016

Re: Best option for dependents with Divorce

Hi roman_atl,

 

 

Welcome to the H&R Block community.

 

In your situation the ages of the kids actually do not matter.  Both of the children are young enough that they will both qualify for all of the child-related tax benefits for years to come.  In other words, the benefits that the kids will qualify you for will be the same for the foreseeable future, at least for the next six years.

 

Let's look at the rules for dependents & divorce though because there is actually not a simple answer to this one.  Only one parent can claim a child for full benefits after all is said and done, and the other can claim some but not all benefits when allowed to claim the child on their tax return for their years.

 

In order to claim a child as a qualifying child that child must have lived with you for more than half of the year.  The child must also meet four other general requirements:

 

  • the child must not have provided more than 50% of their own support
  • the child must not be the dependent of another taxpayer
  • the child must be related to you
  • the child must not have filed a joint return with another taxpayer

 

Since you and your ex-spouse have joint custody you may both meet some or all of the general requirements for a given year.  If both parents meet all of the qualifying child requirements then we go through the tie-breaker rules.

 

  1. The parent always has the higher right to claim the child.
  2. If both parties are parents then the parent with whom the child resided the longest during the year has the right to claim.
  3. If the child lived with both parents for an equal number of nights during the year then the parent with the higher adjust gross income has the right to claim.

 

What happens in a divorce situation though is that the parent who has the right to claim the kids after all requirements and tie-breakers are taken into account may provide the other parent with Form 8332 which releases the right to claim the children to that parent.

  • The parent whom receives Form 8332 is called the non-custodial parent under the tax law, and he or she may claim the child as a non-dependent child and claim the child's exemption, child tax credit, and any education credit for which the child is eligible for their years that they are allowed to claim the child.
  • Only the custodial parent (the one who has the right to claim under the QC and tiebreaker rules) may claim the earned income credit, head of household filing status, and dependent care credit.

 

So what you'll have to look at is which one of you is the custodial parent under the tax law and then kind of go from there.  More than likely, if the custodial parent's income is within the limits for the earned income credit and the child tax credit then it will be more beneficial for the custodial parent to claim both of the kids, but at the same time claiming one or both of the kids may also benefit the other parent even if their income makes them ineligible for the child tax credit.  You have to look at all of the possibilities within the tax law and go with what's most beneficial for you.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)