Claiming Children as Dependents and Other Tax Implications of Divorce

by | Feb 3, 2016 | Uncategorized | 0 comments

Tax return time is fast approaching yet again. While no one is ever excited about filing a tax return, if you are recently divorced or considering divorce, you may wonder how that will affect your tax returns. Will you get more money or less? When do you file as divorced, and when do you file as single or head of household? Can you claim your children as dependents?

Fortunately, the IRS has fairly clear and straightforward rules regarding newly divorced filers with children.

Filing Status

You file as either single or head of household for the entire year you got divorced. So if your divorce was final on Dec. 31, 2015, you would file as divorced for 2015 (meaning you would file as single or HOH by April 15, 2016). On the other hand, if your divorce was final on Jan. 1, 2016, you would file either single or head of household for 2016 (meaning you would file as single or HOH by April 15, 2017), and you would be considered married for all of 2015.

Claiming Children as Dependents

Only one ex-spouse can declare the children as dependents. This is generally the custodial parent (the parent with whom the child spent the greatest number of nights during the year). In order to declare your children as dependents you must have:

  • Filed your own return
  • Paid more than half the cost of maintaining your home
  • Your ex-spouse cannot have lived with you for the last six months of the year
  • The children must have lived with you for the majority of the year

Which spouse claims the children as dependents can be negotiated during the divorce process. In order for a noncustodial parent to claim children as dependents, the following must apply:

  • The parents are divorced or legally separated
  • The parents provided over half of the children’s support
  • The children are in custody of one or both parents for half the year or more
  • The custodial parent signs a written declaration the noncustodial parent will claim the children as dependents and the noncustodial parent attaches this declaration to his or her return

Child Support and Alimony

Child support is neither deductible by the payor nor considered income for the receiving parent, since all money for child support is exclusively intended for the support of the children. Alimony, however, is considered income for the recipient ex-spouse, who must declare the money on his or her income tax return, and the payor spouse can deduct payments on his or her own return.

A basic understanding of the tax consequences of divorce is beneficial, but every circumstance is unique. If you are contemplating divorce, speak to an experienced family law attorney familiar with the tax consequences of divorce to discuss your case.