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Divorce and Who Can Claim Minor Children on Tax Returns

The financial impact of a divorce is often one of the longest-lasting challenges that families will face. Divorces can be expensive, even without the changes in household income and bills. This is especially true for divorced couples with children. The way divorced parents approach filing their taxes each year is another financial consideration they must keep in mind.

Claiming your child as a dependent on your taxes means you can qualify for credits like the Child Tax Credit. Can you or your ex claim your children as dependents in North Carolina? The answer can be complicated, which is why seeking individualized guidance from a Greensboro divorce lawyer is the best way to get answers regarding your divorce.

IRS Regulations for Claiming Dependents

A dependent cannot be claimed by more than one person, which means you and your ex cannot both claim your child. Your tax return will run into delays if both parents claim the same child because the IRS will be forced to go through the extra step of deciding which parent is qualified to claim the child.

A number of factors are used to determine if you are eligible to claim a dependent child, including your relation to the child, the child’s age, their residence, and your financial support of the child. Most often, it is the custodial parent that claims the child because of the residency requirement, which states that the child must have lived with you for more than six months.

However, if you and your ex share physical custody 50/50, the IRS states that the parent with the higher adjusted gross income is the custodial parent for the purpose of claiming a dependent.

Claiming Dependents After Divorce

If you and your spouse can work out an agreement regarding taxes before divorce, then it can be included in a separation agreement or your divorce decree. If you are already divorced, you may still be able to come to an agreement if both of you can agree. It is common for divorced couples to take turns claiming their child or for each parent to claim a different child if they share more than one.

However, disagreements can arise even after an order is in place, which is what happened in Erickson v. Erickson out of South Dakota. During their divorce, Father and Mother had a stipulation and separation agreement that settled child support and custody matters, which were then incorporated into the divorce decree.

In 2022, Father moved to hold Mother in contempt because she had been claiming their children on her tax returns since 2018. In response, Mother filed to modify the divorce decree and separation agreement because there was a mistake in the text.

The circuit court determined that Father had relied on an erroneous provision and approved Mother’s motion to modify the separation agreement. The court also approved Mother’s request for attorney fees. Father appealed this decision. The Supreme Court of South Dakota agreed with the lower court’s determination that language in the separation agreement was vague and did not reflect the parties’ oral testimony that allowed Mother to claim the children. However, the Court remanded the case to the circuit court for reconsideration on the attorney fees awarded to Mother.