Child custody and taxes can be complicated during divorce

The process of getting divorced in New Jersey can understandably be challenging from a financial perspective. This is particularly true for those who have children and, thus, must deal with child custody during their divorce proceeding. One aspect of divorce that can be confusing for those with children is determining who can claim a child as a dependent for tax purposes.

A dependent can have a major effect on taxes. After all, the parent who claims a child as a dependent can claim the tax filing status of the head of the household. In addition, he or she can enjoy the exemption available for a dependent, as well as several tax credits. These credits include those for having a child, for child and dependent care, and for earned income. Both the amount of a credit and the ability to qualify for a credit are impacted by the dependents that a parent can claim.

For the 2018 tax year and subsequent tax years, the Tax Cuts and Jobs Act, or the TCJA, ended up removing the personal exemption that taxpayers once enjoyed. However, the tax credits for having a child and for dependent care have been retained. The IRS takes into consideration several factors for determining who can claim a child as a dependent if this is not spelled out in a divorce agreement. These factors include which parent has provided more financial support to the child and with which parent with whom the child has lived the longest in the relevant tax year.

Producing a divorce agreement that satisfies both parties is the easiest way to handle such matters in New Jersey. In addition to addressing child custody and the claiming of a child as a dependent, a divorce agreement can highlight how matters such as property division and alimony are to be handled. An attorney can provide the guidance needed to achieve a personally beneficial agreement during this type of family law proceeding.

Source:, "Who claims the children on taxes after divorce?", March 16, 2018

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