When parents of a child divorce, it can be a complex and lengthy process deciding which parental privileges and responsibilities each parent will shoulder individually and which will be shared. Often, however, the tax implications of custody are overlooked until it comes time to file in the spring. Many parents are suddenly faced with determining who gets to claim the child as a dependant for tax purposes.
When it comes to tax implications, the law is actually pretty specific. While the family courts may use terms like "50/50 custody" or "joint custody," those are not phrases which are particularly relevant to tax law. Even if you and your former spouse or partner have been given joint custody, in the eyes of the tax code, it is the parent who actually has the greater number of nights with physical custody of the child who is granted the right to claim the child. This is determined on a night-by-night basis, which means leap years can provide each parent with an equal number of custody nights.
If you are the parent who has maintained physical custody of the child for more than half of the year, then you are eligible to claim the child as a dependent. This may entail the earned income tax credit, deducting child care expenses, or possibly claiming Head of Household status. Whenever tax matters are concerned, it is wise to consult a qualified tax professional.
Just because you believe that you may eligible to claim your child as a dependent, your spouse may contest this choice, which can become messy if the IRS becomes involved. To avoid complications with tax authorities, you may consider sorting the specifics out with the help of a child custody attorney ahead of time, to help ensure that your rights remain protected while the best interests of the child are kept at the forefront of the decision making.
Source: intuit.com, "I share 50/50 custody of our son. Who gets to claim him?," accessed Aug. 23, 2016