Getting divorced can be a complicated process. But, the complications are not necessarily over when the judge formalizes a divorce decree. Tax season is another one of those complicated times of the year.
One of the issues that parents face is which parent gets to deduct the minor children on their taxes. Only one parent can do so. This procedure has changed in recent years. At this point, the deduction is assigned to the parent who has custody more than half of the time. If the parents share custody in an exact 50-50 split, then the deduction is assigned to the parent with the higher adjusted gross income.
Parents may quibble over the assigned agreement versus what actually happened in terms of parenting timne. For the purposes of the Internal Revenue Service, they don’t really care. They are only interested in the signed custody agreement as far as the custodial time was assigned and agreed to. What actually happened? The IRS is not interested.
Parents should also be aware that there are tax credits for child care expenses required in order for the taxpayer to work: the Dependent Care Credit and the Child Tax Credit.
The Dependent Care credit is applicable for care of a child 12 years or younger, if the child lives principally with the taxpayer. The credit can only be assigned to one parent. Typically, it is assigned to the parent who has primary custody.
The Child Tax Credit is $1,000 per child. The child must be 16 or younger. This tax credit can also only be claimed by one parent.
