Our friends at Askey, Askey & Associates CPA (with offices in Leonardtown, La Plata, and Waldorf, Maryland) just sent their newsletter, which is always a good read.
It has a very good article covering this topic – when parents divorce, who gets to claim the kids on their taxes?
This is an important divorce law topic as it can be worth quite a bit of money come tax time.
Who Gets To Claim the Kids?
Normally, the legal issue of who can claim the children will be something your lawyer will deal with during the divorce.
If you have children of the marriage, your separation agreement or divorce decree will usually address the issue of who gets the kids at tax time.
This is something that can be negotiated. You should be sure to discuss this issue with your divorce lawyer.
Sometimes, both of the parties work and could use the tax credit. In that case, it is common to trade the tax credit every other year, or split the credit so one party claims one child and one claims the other (if you have multiple children).
Sometimes, one spouse will have a higher income than the other. In that case, the tax credit is worth more to the spouse with higher income, so they may give up something else to get that tax credit. This can work very nicely for the spouse with the lower income.
This does not necessarily turn your children into bargaining chips. The tax deduction for children is a serious tax matter and can significantly affect your taxable income. It is only wise to consider how it will be allocated in your divorce settlement.
How Much Is It Worth?
The tax credit can be for as much as $2000 per child. It depends on your income and other tax related matters, but it can be worth $2000.
That is a significant amount of money.
Plus, this is a tax credit – so it reduces your taxes dollar for dollar. That is much different than a tax deduction – which reduces your taxable income but does not result in a dollar for dollar gain to you.
Conclusion & Next Steps
We are NOT accountants and do not pretend to be. For the tax related details, you should contact your tax adviser. If you need a good one, we recommend Askey, Askey & Associates.
Want to know more? Discover what you need to know about divorce in Maryland. Click here to read our Free Legal Consumer Guide to Child Custody and get answers to your questions today.
Know your options. Be informed. Protect yourself.
Need a divorce lawyer or child custody attorney? Please contact us for a consultation today if you need a Maryland divorce lawyer for your family law case.
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