Many financial issues can arise when you and your spouse decide to file for divorce. One major issue you need to address is who can claim your children as dependents on federal and state tax returns. It can become a contentious dispute between you and your ex. You could benefit from hiring a lawyer to guide you through the process and resolve the matter as amicably as possible.
Although you might feel uncomfortable discussing finances with your ex, it’s a crucial conversation to have while going through a divorce. It’s especially vital if you share children. Besides determining who should be responsible for monthly expenses, such as rent or mortgage, healthcare, clothing, groceries, and other necessities, you must agree on what to do when tax season arrives.
Credits and Deductions on Federal Taxes with Dependents
You could use credits, deductions, and exemptions to reduce tax liability and final income whenever you file your tax return. Exemptions and deductions decrease the calculation for your final income, which reduces your liability. Credits can also reduce your liability based on your adjusted gross income.
When you’re a parent, multiple tax credits could apply if you claim your child as a dependent on your federal tax return. You could receive a Child Tax Credit if you have any kids under 17 years old. You could also benefit from a Child and Dependent Care Credit if you’re the custodial parent claiming your child on your taxes. This would allow you to deduct specific expenses related to caring for your kids.
Child Deduction Amounts in North Carolina
North Carolina allows a custodial parent to file as a head of household and decrease their amount of taxable income. The deduction will depend on your adjusted gross income. You can deduct these amounts for each child you have:
- Up to $30,000 adjusted gross income – $2,500
- More than $30,000 and up to $45,000 – $2,000
- Over $45,000 and up to $60,000 – $1,500
- Over $60,000 and up to $75,000 – $1,000
- More than $75,000 and up to $90,000 – $500
- Over $90,000 – $0
These deductions are only for tax filings in North Carolina.
Claiming Dependent Children on Taxes
A range of factors will determine whether you can claim your children as dependents on your federal and state taxes. If you don’t have a court order or signed agreement in place with your ex, the custodial parent is typically the person allowed to claim minor children on their taxes.
In North Carolina, you are the custodial parent if your kids live with you for at least 180 days of the year. You could claim your child as a dependent when filing your tax return if you physically care for them for most of the year.
As the custodial parent, you should complete Form 8332 to:
- Retract previous exemption claims
- Release the exemption claim to your child’s non-custodial parent
Deciding Who Can Claim Your Child as a Dependent
You should discuss the matter of who will claim your children on taxes with your ex as soon as possible. It could become an ugly courtroom battle if you don’t address the matter early on during divorce proceedings. If you resolve the issue amicably, you can avoid going to court and having a judge decide for you.
Hire an attorney to represent you, so you know what to expect during negotiations. If you’re the custodial parent, you should be allowed to claim your children on your taxes. However, if you’re the non-custodial parent but your ex will allow you to claim your kids as dependents on your tax returns, make sure the agreement is in writing. Some parents agree to a rotating schedule, with one parent claiming their children on their taxes one year and the other parent claiming their children the next year.
Going to court might be necessary if you and your ex can’t seem to agree. A judge will need to review all relevant factors to determine whether you or your ex can benefit from tax deductions and credits when filing tax returns.
At Marshall & Taylor PLLC, our Raleigh divorce attorneys will fight for your rights while you’re going through your divorce. We understand the overwhelming nature of settling important matters with your ex. You should walk away from this with your needs met and the interests of your children protected.
If you want legal representation during your divorce in North Carolina, contact Marshall & Taylor PLLC. We can guide you through the complex process and determine your legal rights when it comes to your children. You can depend on our team to be your advocate and support you through this difficult time in your life. Call (919) 833-1040 today or contact us online.