IRS rules for divorced parents who claim dependent children

A divorce requires California parents to decide who gets to claim the children as dependents on federal tax returns. Claiming children could produce significant tax savings via the Dependent Care Credit and Child Tax Credit. A custody, divorce or separation agreement can specify who gets the privilege of claiming the dependents. In the absence of such an agreement, then IRS rules determine who can claim children on a tax return.

The IRS grants parents top priority when non-parents make competing claims. Residence also matters to the IRS when the agency decides who has the right to claim dependents. The custodial parent who has children in the household for the majority of the year will generally get to claim them for tax purposes. Joint custody that places children in two households for equal amounts of time will cause the IRS to look at another factor. Child credits will go to the parent who has the highest adjusted gross income.

A custodial parent who wants to alter the application of these IRS rules has the option to complete IRS Form 8332. This form releases or revokes the ability to claim children. This release can apply to a single year or multiple years. A person can also execute the form to undo previously relinquished rights.

Available tax credits for dependent children could play a substantial role in a person’s budget after a divorce. Advice from a lawyer who practices family law could inform a person about tax consequences and other financial matters that change after ending a marriage. A lawyer could also manage issues like negotiating the division of property and child custody.

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