April 17th, 2023

If you are a parent considering divorce or another change in family status, tax time may have you wondering about how tax filing works as you move forward. For example, which parent will claim the child(ren) on their income tax return? And who gets to decide that? Read on for guidance.

The IRS allows a taxpayer parent of a child (including also a step child or foster child) to claim the child as a dependent if the following are true:

  • The child must be one or more of the following:
    • under age 19 at the end of the year;
    • under age 24 at the end of the year, a student; OR
    • any age if permanently and totally disabled.
  • And the child must have lived with you for more than half of the year.
  • And the child must not have provided more than half of their own support for the year.
  • And the child must not be filing a joint return for the year (subject to very specific exceptions).

That may seem straightforward enough, but complexities arise in many situations. For example, what if the percentage of time the child lives with a parent varies from year to year? What happens if a parent who the child did not live with for more than half the year claims the child on his/her tax return? Do parents who have agreed on how children shall be claimed for tax purposes need to advise the IRS or other tax authorities of their agreement?

A family law attorney can help you answer these questions as they may apply to your situation. A knowledgeable attorney will ensure that your final judgment sets out the specifics considering how children will be claimed between the parties moving forward. The attorney should foresee issues that may arise, and provide you with options on how to head off any disputes.

If you’re reading this post, you might feel like I am leaving you with more questions than answers. However, there are some general rules that may give you a better grounding on this issue:

  • Usually the parent in whose household the child spends the most time in a calendar year (i.e., the “custodial parent” here) gets to claim the child on his/her tax return.
  • But, if your judgment allows a non-custodial parent to claim the child, then the non-custodial parent can do so. See Minnesota Statute 518A.38, which provides the state’s courts with the authority to decide child tax exemption issues in certain cases (including, e.g., divorce and custody matters).
  • There are a few common ways that parents allocate child tax exemptions:
    • Parents alternate years, with Parent A claiming the child(ren) on even years and Parent B claiming on odd years.
    • Exemption splitting: in the case of 2 (or another even number) of children, one parent claims one child and the other parent claims the other child each year. After the first child emancipates, a different rule may be applied.
    • If it is expected that only one parent would reap a benefit from claiming the child(ren) (e.g. the other parent has no income to report), the parties may agree that only the parent who can benefit will take the exemptions each year.
    • In the event the child(ren) live with the custodial parent for far more than half of the year, e.g., the parents may agree that the custodial parent will always claim the children.

In the end, consulting with a professional is usually the best way to find success for both sides. It should also be noted that there are many more options other than those listed above—your attorney can help you get creative with problem solving.

If you have further questions about the issue of taxes in MN family-law proceedings, please us today for a free consultation.