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Helton Law Firm, PLLC

The effect of divorce on child tax deductions

The Internal Revenue Service recognizes that raising children is expensive and extends valuable exemptions and tax credits to parents in Tennessee. When parents divorce or separate, they cannot share in the tax benefits of claiming a child as a dependent. Only one parent can claim the child as a dependent. The IRS will not recognize any agreements or court orders that attempt to spread the tax benefits between divorced parents.

In general, the IRS views the custodial parent as the person providing more than half of a child's support. In most cases, the custodial parent has a right to claim the child as a dependent and gain access to tax exemptions and credits. When a noncustodial parent provides more than half of the financial support for a child, that person might qualify under certain conditions to list the child as a dependent. To accomplish this, a noncustodial parent will need to include in a tax return a Form 8332 Release of Claim to Exemption for Child of Divorced or Separated Parents signed by the custodial parent.

IRS rules guide the determination of child dependency in other situations. For example, when parents file separate returns that both claim a child, the IRS will grant the tax credits to the person who cared for the child the most days of the year. If a child lived an equal amount of time with each parent, the IRS will approve the deduction for the parent with the highest adjusted gross income.

A divorce frequently involves long-term financial and tax consequences. A person planning a divorce may discuss financial issues, including child support payments, with an attorney. After analyzing the person's income and specific custody situation, an attorney may be able to estimate how much child support the person might receive or have to pay.

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