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Tax Exemptions for Children: Which Parent Gets to Claim Them?

Posted By Legal Team | August 31 2022 | Divorce & Taxes

Tax exemptions can be helpful, but they can become complicated for parents that are divorced or separated. Yes, parents do generally get to claim their children those dependents on their tax filings but, who gets to file if the parents are no longer together? Here, we want to discuss what you need to know about tax exemptions for parents who are separated or divorced.

Tax Exemptions Are Great – But You Need to Know Who Gets Them

There are some tax benefits to being a parent. Parenting is expensive, and the government does allow for some exemptions. This includes child or dependent tax credits, favorable tax filing status, and the earned income credit. This is all relatively straightforward when parents are married. However, if parents are not married, they need to know who gets to file for these exemptions. There is no double-dipping.

Examining the Difference Between Custodial and Non-Custodial Parents

Typically, we’ll see that the parent who has physical custody will be the one who gets to claim the child on their taxes for exemption purposes. Physical custody can be decided in a few ways, most commonly by examining who was granted physical custody through a court order.

There are situations, though, where parents have not gone through a divorce or when they do not have any court orders regarding legal or physical custody. In these cases, a court will look at where the child spends the majority of their time – where do they reside for more than half of the year. Whichever parent a child spends more time with will typically be the one able to claim the child as a dependent.

That said, the non-custodial parent may also be able to claim the child as a dependent in certain situations. If the divorce or separation agreement of a written declaration from the custodial parent has instructions that the non-custodial parent can claim the child on their taxes, then that is what will happen.

Are There Tiebreaker Rules?

There are situations where it can be hard to determine who gets to claim a child on taxes for exemptions. If the child spends an equal amount of time with both parents, or if no decree or declaration says otherwise, what happens next?

Typically, the tiebreaker rules will determine the custodial parent by examining:

  • Where the child spends most nights
  • Which parent has the highest adjusted gross income, if the child spends an equal amount of time with both parents

If both parents claim the child as a dependent, which is not hard to do with tax software being automated, then the IRS will use tiebreaker rules to make a final determination about dependents and exemptions. If the IRS determines that a parent does not get to claim a child after they have already done so, then that parent will need to file an amended return. Additionally, if a parent files when they should not, they run the risk of being audited by the IRS.

It is much better for parents to communicate with one another about who will get to file for exemptions when tax season rolls around.

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