Many clients and prospective clients have tax questions upon receiving their W-2. The most frequently asked question is which parent should claim the “qualified child,” which has a legal definition, for the income tax exemption or credit. For IRS purposes, the custodial parent is entitled to claim the qualified child for the tax exemption. The IRS defines the custodial parent as the party with whom the child lived for the greater number of nights during the year. The other parent is the noncustodial parent.
For whichever parent is not entitled to claim the qualified child for the exemption, he/she must use Form 8332, which makes a written declaration to release the exemption to the noncustodial parent. If necessary, the court can force one of the parties to sign this form.
More frequently, parties are unable to come to an agreement as to who should take to tax exemption, therefore the IRS has “tiebreaker rules” to determine which parent is entitled to the exemption.
If the parties have a rotating custody (now known as “time-sharing”) schedule, then the parent with the higher adjusted gross income shall get the dependency exemption.
The goal of the exemption is not to benefit the parties, but to allow the parties as much funds as possible to care for the child(ren).
Parties often rotate tax exemptions and if there is more than 1 child; it’s not infrequent for parties to agree to each claim 1 or 2 children.
The other tax benefits pertaining to children are the child tax credit, head of household filing status, child and dependent care expenses, exclusion from income and dependent care benefits and the earned income credit.
Keep in mind that the IRS has a program for Refund Offsets, and refunds may be confiscated for any past due child support along with many other debts. If past due child support applies to you, contact Mindi Lasley an experienced Tampa child support attorney.
Most divorced parties know that court ordered alimony is taxable to the recipient and tax deductible to the payor.
I’m also asked about relief from liability of by one spouse of penalties, interest on a joint return. There are three types of relief available:
- The Innocent Spouse Relief
- Separation liability
- Equitable Relief
There are also situations in which the recapture of alimony should be applied in tax situations. This is a difficult situation which should be discussed with an experienced Tampa divorce attorney. Please call Mindi Lasley for a free consultation.