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Divorce, Children, and Your Federal Tax Return

Although some married parents do file their taxes as married but separate, most opt to file their taxes jointly. This is because joint filing tends to offer more tax credits to those with dependents. What happens, though, when a couple divorces? How do they manage tax credits and deductions for dependents? The following explores the answers to these questions. It also offers some divorce strategies that may help to reduce the risk of confusion during tax season. 

Benefits of Claiming Dependents on Your Taxes

Being able to claim a dependent on your tax form can offer numerous benefits. This can be especially important when there are medical expenses, child care costs, and other expenses related to rearing your child. Some may also be eligible for Earned Income Credit - a special credit that is offered to parents within a specific tax bracket. Yet, there are still benefits to claiming a dependent, even if you or yours spouse are not eligible for any of the special tax credits. In fact, just having a child as a dependent can change your tax bracket and/or tax responsibility to the Internal Revenue Service (IRS).

Deciding Who Claim the Dependents

While only you and your family can truly decide the best path for your situation, there are some guidelines that you can use to determine who should claim your children as dependents. For example, the parent that has the children the majority of the time likely makes a bigger financial contribution to raising them. As such, it may make more sense to have this parent claim the children on their taxes. Conversely, parents who have the children about an equal amount of time may choose to alternate which one claims the child (i.e. dad claims one year and mom claims the next). Whatever your decision, it is critical that you speak with a tax professional to ensure you understand the potential implications that claiming or not claiming a dependent may have on your tax obligation to the IRS.

Strategies for Reducing Confusion

If you and your spouse both happen to claim your child as a dependent in the same tax year, the decision could be left up to the IRS. This can delay any refund that may be owed to you and may create potential complications for one or both parties. To avoid this confusion, parents can employ some strategies during the divorce process. For example, they could ensure that dependent filing privileges are explicitly outlined in their divorce decree. Talk to your divorce attorney if you would like to hear about other ideas and strategies.

At The Stogsdill Law Firm, P.C., we work hard to ensure every detail and potential speed bump is addressed in your divorce. We strive to mitigate any potential issues you may experience, even after the process is complete. Turn to the firm that cares. Call 630-462-9500 and schedule a personalized consultation with our DuPage County divorce lawyers today.

Source:

http://theweek.com/articles/679897/what-happens-when-divorced-parents-both-try-claim-kids-dependents

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Wheaton, IL 60189

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