Jeeze, as if divorce wasn’t stressful enough, now tax season is almost here. If you haven’t taken the time to consider how filing taxes after divorce will impact you, it’s time to start thinking about it. When there is a divorce or separation, who is the custodial parent? And, is the custodial parent the one claiming the child as a dependent? For most cases, the qualifying dependent can be distinguished using the residency test. Sometimes, the noncustodial parent can have the child as an exemption when filing taxes after divorce, and here is how.
Noncustodial Claiming the Child as a Dependent
For one parent to claim the child as a dependent when filing taxes after a divorce the following 4 criteria must be true.
- The parents are divorced or separated. Or, they have lived apart at all times during the last 6 months of the year, whether they are married or not.
- The child has received over half of their support for the year from the parents.
- The child is in the custody of one or both parents over half of the year.
- The parent has a written declaration signed by the custodial parent claiming that they will not claim the child as a dependent, known as the Internal Revenue Service Form 8332.
Who is Considered the Custodial Parent?
When filing taxes after divorce, it is crucial to know who the custodial parent is. For the parent claiming the child as a dependent there is a personal exemption. For 2014 the personal exemption is $3,950. In most cases it is the one whom the child lived with the greater number of nights during the year. If the separation or divorce occurs during the year and the child lived with both parents prior, then it is the greater number of days during the rest of the year.
The child is considered to be living with a parent if the child sleeps at the parent’s home. This also applies if the child slept in the parents company away from the parent’s main place of residence (like if the parent brought the child on a vacation).
If the child is with the parents an equal number of nights, the parent with the higher adjusted gross income (AGI) will be considered the custodial parent when filing taxes after divorce.
Joint Physical Custody
When parents have joint physical custody of a child it may be unclear which parent is considered the custodial parent when filing taxes after divorce. If it is at all doubtful, it is important to keep a log of exactly where the child lives during the year. It is important to settle which spouse is to be entitled to claim the dependent exemption. If the situation is muddied and both parents claim the same child in the same tax year, both parents will face an audit by the IRS. An audit could lead to tax penalties, just another reason to be proactive with your separated spouse when filing taxes after divorce.
If you need help understanding who the custodial parent is and how to file taxes after divorce, DeFreitas & Minsky Certified Public Accountants can help you sort everything out. We’ll work with you to better understand all of your personal exemptions and deductions when filing taxes after divorce. Call us at 516.746.6322 for more information.