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Who Claims a Child on Taxes with a 50/50 Custody Arrangement?

If you’ve recently divorced and you have a shared custody agreement with your ex-spouse, this may be your first year having to file taxes with this new arrangement. One of the most common questions people in your situation have is “who claims the kids on the tax return”?

When you share custody, the answer to this question isn’t always obvious. However, we’ve got some general guidelines that can help you determine whether or not you can claim your child(ren) on this year’s tax return.This IRS standard can often contradict the court order or agreement. In such situations, the parties should prepare and file with their taxes Form 8332 to release a child tax exemption. 

How to Avoid Issues With Taxes and Shared Custody

In general, the best way to avoid issues with taxes and 50/50 custody is to make sure you and the child’s other parent have reached an agreement on who will claim the child ahead of time. If both parents attempt to claim the child, this can result in a stressful tax audit on both sides.

Oftentimes, parents with 50/50 custody arrangements will choose to alternate; one parent will claim the child on one tax year and the other parent will claim the child the following year. In cases where there is more than one child, it may make sense to have one parent claim one child and the other parent claim the other child. Ultimately, it’s about finding a resolution that works for both parties.

Take Advantage of Child Tax Benefits

Regardless of the agreement you reach with your ex-spouse, it’s important to take advantage of any and all child tax benefits available to you as a parent. For example, it may sometimes make more sense for one parent to claim the children on their taxes if doing so qualifies them for additional tax benefits (such as a dependent care credit). Both parents may agree to this arrangement, especially if the money from the credit can be put into a college fund or similarly used to the kids’ advantage.  

Court Order and Guidelines 

If an agreement cannot be reached the court will often follow the general rule to alternate child tax benefits proportionate to the parents income. For example, If the parents make a combined $100,000 a year but Parent A makes $66,667 (⅔ of the combined income) and Parent B makes $33.333 (⅓ of the combined income) then the rotation will have Parent A claiming child tax benefits 2 out of every 3 years and Parent B 1 of out every 3 years

Navigating child custody and taxes after a divorce can be complicated—and things are rarely as cut-and-dry as they may seem. With this in mind, having an experienced family lawyer on your side can make all the difference. Reach out to our team at San Tan Family Law today for help with your unique situation! 

Determining the Custodial Parent

According to the Internal Revenue Service (IRS), the parent who had custody of the child for the most overnights during the given tax year should claim the child. Even in a 50/50 arrangement, there should be one parent who has custody of the child overnight for more than 50% of the time. Of course, there are some possible exceptions to this (such as in the case of a leap year or when the child spends time with a third party during the year).

Still, even in a 50/50 custody agreement, there will almost always be a parent who has slightly more parenting time than the other. This is the parent who should claim the child on that year’s tax return.

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