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Taxes and claiming dependents: What happens after a divorce?

There are many issues that parents must address in the process of their divorce. They must negotiate several different aspect, including financial matters, property division and  how they will share custody of their children.

It is critical to think about the future when finalizing a divorce. And yet another aspect that parents should not overlook is the impact a divorce can have on their yearly tax filing. While taxes are not something many want to think about, it is an important topic for parents to consider so they can avoid problems – and potential disputes – down the road.

When can divorced parents claim dependents on their taxes?

The answer to this question depends on several variables.

According to the Internal Revenue Service (IRS), claiming a child as a dependent requires a few factors to be met, including but not limited to:

  • The child must live with the parent for more than six months of the year
  • The parent should provide more than half of the financial support for the child

In most cases, this means that the custodial parent claims their child as a dependent.

However, there are some exceptions and situations when a non-custodial parent could claim the child as a dependent. This is why it is critical for North Carolina parents to carefully review all of the IRS rules regarding divorced parents and dependents.

Plan for taxes proactively in the custody agreement

Thankfully, parents can prepare for filing their taxes post-divorce long before they actually have to file. Parents can address how they will approach this matter in their custody agreement and their parenting plan.

For example, many divorced parents specify that they will alternate years claiming their child as a dependent. Any arrangement requires careful thought and planning to abide by tax rules, but it is possible for parents to customize a strategy that works best for their family’s financial needs.

Parents should consider these issues – and understand the rules surrounding them – before they must file their taxes, so they can reduce the stress that often comes with tax season.