Parents in Virginia may wish to take advantage of claiming their child as a dependent as they prepare their annual income tax returns. When a child’s parents are married, doing so is relatively easy. However, if a child’s parents are unmarried things can become murkier.
Being able to claim a child as an exempt dependent on one’s taxes is financially advantageous. In addition, if a child is claimed as a dependent, the parent may be able to take advantage of the Child Tax Credit and other tax credits.
However, the recently passed Tax Cuts and Jobs Act affect these exemptions and tax credits. It increased the Child Tax Credit twofold, and kept the Dependent Care Credit. However, it did take away the personal exemption starting in tax year 2018. So, while a person would no longer be able to reduce their income based on their dependents starting in tax year 2018, the Child Tax Credit will have risen to $2,000. Previously it was $1,000.
When a child’s parents are divorced, who can claim these dependents and tax credits becomes important. In general, the parent with whom the child resides with for the greatest amount of time is the parent that will claim the child as a dependent. If the child lives with each parent an equal amount of time, in general the parent with the higher adjusted gross income will claim the child as a dependent. It is also possible for a custodial parent to grant the noncustodial parent the ability to claim the child as a dependent.
It is important for divorced parents to determine ahead of time who will claim the child as a dependent. This is because the Internal Revenue Service will accept the tax return of whichever parent claims the child as a dependent first, and will reject the other parent’s tax return if the other parent also tries to claim the same dependent.
In the end, this post only provides general information on child custody and taxes, and cannot serve as legal advice. Parents who need more information on this topic are encouraged to consult with a family law professional for information on how the law applies to their situation.
Source: wrex.com, “What to do when divorced parents both want to claim the same dependents,” March 16, 2018