Tax season is approaching and you may be asking how your child custody arrangement affects your taxes. Your custody arrangement may have a very specific impact on whether or not you can claim a child tax credit. The child tax credit allows a parent to claim a credit for each dependent child. But what happens if the child’s parents are separated or divorced and are not filing their taxes jointly? Who gets to claim the child in that situation? The IRS says that generally speaking, the parent who has the child for the majority of the overnight time is the one who is eligible for the credit. This would generally be the parent with primary physical custody. But what happens when the parents have 50/50 physical custody? If the child stays with each parent for an equal number of nights then the parent with the lower adjusted gross income is considered the custodial parent and is able to claim the child tax credit. However, please note that even if the custody arrangement is called joint custody, if the parents have an unequal number of overnight visits then the parent will the greater number will be considered the custodial parent for tax purposes. While these are the general rules, the parties can make different arrangements which could be ordered by the court in a marital settlement agreement. While taxes are certainly not a determining factor what deciding on custody arrangements, the tax consequences are something to keep in mind and should be discussed with your attorney.
**This article is not intended to give tax advice and if you have questions about whether or not you are able to claim a credit, you should consult a tax professional.