By Matthew T. Hovey, Esquire
It’s tax season again and the April 15th deadline is quickly approaching! As a result, as a family law attorney, a lot of tax related questions are coming in from my clients. A common question is: can the non-custodial parent ever claim the children on federal taxes after a separation or divorce?
The answer is yes, with the cooperation of the custodial parent (the parent with 51% or more custody). If you and the other parent are separated or divorced, then, as long as either of you had primary custody of the child or children for the taxable year and either of you provided a majority of the support for the child or children for the taxable year, the custodial parent can transfer the claim to you, the non-custodial parent. In order to effectuate the transfer, the custodial parent must execute IRS Form 8332 and you, the non-custodial parent, must attach the signed/executed form to your tax return.
A natural follow-up question is: why would the custodial parent agree to transfer the tax claim? Often the transfer is part a negotiated property or custody settlement. If the non-custodial parent is also the primary financial provider, the credit can be very valuable to them. Additionally, those benefits can be long lasting because the children can be claimed for years and years. As a result, it becomes a valuable bargaining chip and the custodial parent may find it beneficial to transfer the tax credit to the non-custodial parent in exchange for a larger immediate payment in a property settlement.
Lastly, what tax benefits are gained by claiming the children? To answer this question, I’d point you an excellent article posted online by Bill Bischoff of the Wall Street Journal: Child-Related Tax Breaks After Divorce. The article provides a breakdown of the available tax benefits.
If you are currently involved in negotiations for a property or custody settlement, please contact our office at 888-313-0416 to schedule a free initial consultation!