Tax Season

Many divorced or separated parents have to decide who gets to claim the tax exemption for the child or children.  Sometimes it's easy: two kids, 50/50 custody split - they each get to claim one.  Or if there is only one child, the parents may alternate years claiming the exemption.  But it can get difficult where there's an odd number of children and/or the physical custody is not evenly split.  Often parties agree how they're going to arrange the exemptions as part of a final custody order or divorce judgment, but the first year filing separately can be difficult if the case is ongoing and an agreement hasn't been reached. It's also important to note that the Internal Revenue Code controls over and above a family court order.  The rule is that the parent who has the child 50% or more of the time (the custodial parent) is entitled to the exemption.  That is a hard and fast rule: the person with the majority of the parenting time is automatically entitled to the exemption. If the parties agree that the parent with less than 50% of the physical custody will claim the  exemption, the non-custodial parent still has to get an IRS Form 8332 signed by the custodial parent in order to be able to claim the exemption.

My own two cents: Often parents who are not in agreement about this will feel like it's a race to file their taxes first, but this is a bad idea.  If the parent who is not entitled to the exemption files first and claims that exemption, they're just creating more work for themselves because they'll have to file an amended return and possible return some money they've already received.  Also, newly divorced parents who have never filed taxes on their own before or who separated partly through the previous tax year should really see a CPA.  If you have a divorce attorney, seek a recommendation for a good CPA from him or her.  Ask your coworkers if they know a good CPA.  It might seem like a big expense, but it's almost always worth it to pay $100-$200 up front so you know you're following the law correctly and taking advantage of any credits to which you might be entitled.