How does child custody affect taxes?

The deadline to file your taxes is less than a month away. As we get closer to April 15, some Missouri parents who divorced last year may be wondering how their child custody arrangement factors into their federal tax returns. In today’s post, we will help you begin to understand who can claim the children as dependents and what benefits that person may receive.

Under IRS rules, only one parent can claim the children as dependents on their tax returns — not both. Most often, the custodial parent is given this exemption, since he or she typically provides the majority of support to the children. However, there are exceptions.

If you and your ex split child custody evenly — meaning the children spend the same amount of time with both of you over the course of a year — the parent with the higher adjusted gross income will be allowed to claim the children as dependents. It is important to note that the IRS has final say over who can claim dependency exemptions after a divorce or separation. Your federal tax status is based on federal law, not a state or county custody order.

Parents who are able to claim their children as dependents may receive several tax benefits, including filing as the head of household, the child exemption, a credit for child care services and the child tax credit.



We hope this information gives you some idea of how your custody arrangement will affect your tax return. Because not all custody situations are straightforward, however, it may be helpful to seek the guidance of an experienced attorney.

Source: FindLaw, “Child Custody and Taxes,” Accessed March 19, 2015