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Child custody does affect your tax returns

When you and your child's other parent choose to raise the child separately, it is important to understand that the custody agreements you reach may carry significant legal implications and may even affect your tax returns significantly. While many parents prefer to avoid the hassle of working out a professional child custody agreement with an attorney, this path often leads to greater frustration later on, not less.

While it is certainly worth the effort to keep things between you and your child's other parent amicable, don't make the mistake of prioritizing civility between you over your actual legal and financial obligations. Depending on the age of the child, you may have to continue to navigate this relationship for years. It is wise to deal with these complicated issues in a professional way as soon as possible to set you both up for success in the long run.

Child custody carries a number of tax advantages, but only to one household per child per year. This means that two parents may not both claim the same child as a dependent in the same year if they are not raising the child in the same home together. These advantages include credits for some childcare expenses, exemption for the child itself, child tax credits and more.

Commonly, parents agree to simply alternate years of claiming the child as a dependent. If this works for your family, be sure to that both parties fully understand what that entails to avoid unnecessary conflicts and possible involvement by the IRS.

Don't hesitate to reach out to an experienced attorney to understand how your custody agreement may affect your tax returns and keep yourself protected while you work to provide the best life you can for the child you love.

Source: FindLaw, "Child Custody and Taxes," accessed Dec. 01, 2017

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