Divorce is a difficult and emotional process for any family. When children are involved, it can become even more complicated. One issue that arises in many divorce cases is who will get to claim the children on their taxes after the divorce. This question is governed by both federal and state law, and in the state of Texas, there are several factors that determine who gets to claim the children on their taxes.
Child Tax Credit Benefits
The first thing to understand is that claiming a child on your taxes can result in a significant tax benefit. This is because there are several tax credits and deductions available to parents who claim their children as dependents. For example, the Child Tax Credit allows parents to reduce their federal income tax by up to $2,000 per child, while the Earned Income Tax Credit can provide a refundable credit of up to $6,728 for families with three or more children. Being able to claim at least one child may also change your tax billing status from single to head of household Given the importance of these tax benefits, it’s no surprise that many divorcing parents want to know who will get to claim their children on their taxes.
Under federal law, the parent who has custody of the child for the majority of the year is generally entitled to claim the child as a dependent on their taxes. This means that if one parent has physical custody of the child for more than 50% of the year, they will typically get to claim the child on their taxes. However, there are several exceptions to this rule that can come into play in certain situations.
For example, if the parents have joint custody and each parent has the child for an equal amount of time, then the parent with the higher income may be entitled to claim the child as a dependent. This is because the Child Tax Credit is gradually phased out for taxpayers with higher incomes, so the parent with the higher income will generally receive a greater tax benefit from claiming the child as a dependent.
In addition to federal law, Texas state law also plays a role in determining who gets to claim the children on their taxes. In Texas, the court can order either parent to claim the child as a dependent on their taxes, regardless of who has physical custody of the child. This means that even if one parent has primary physical custody of the child, the court could still order the other parent to claim the child on their taxes. In some cases, the court may order the parents to alternate claiming the child on their taxes, with each parent claiming the child in alternating years.
Importance of Correct Reporting
It’s worth noting that claiming a child on your taxes without the legal right to do so can result in serious consequences. If both parents claim the same child as a dependent on their taxes, the IRS will typically reject one of the claims and require the parents to provide additional documentation to support their claim. In some cases, the IRS may even assess penalties and interest for incorrect or fraudulent claims.
In conclusion, the question of who gets to claim the children on their taxes after divorce is a complex one that is governed by both federal and state law. While the parent with physical custody of the child for the majority of the year will generally be entitled to claim the child as a dependent, there are several exceptions to this rule. Ultimately, it’s important for divorcing parents to work with their attorneys and financial advisors to understand their rights and obligations regarding claiming their children on their taxes.
If you have questions about how taxes are handled during or after a divorce, contact us for a free consultation.