The exact conditions of a divorce settlement will greatly influence how child support will affect one’s taxes. An individual should strive to pay close attention to how child support is described in the divorce settlement in order to remain fully aware of all potential tax consequences. Extra caution must be made to not commingle child support with spousal support for the purposes of taxes because spousal support is often taxable to the recipient while child support is not taxable to the recipient. Individuals who are involved in this situation frequently find it essential to learn exactly how custodial and noncustodial parents are determined as well as retaining the services of an experienced attorney.
The Internal Revenue Service only allows custodial parents to claim dependency for children who are deemed to be qualifying. For the purposes of these laws, the Internal Revenue Service defines the custodial parent as the parent with whom the child lived for the greater part of the preceding year. Even for individuals who are paying child support for the benefit of a child, an individual will likely be unable to claim children as dependents on taxes if the individual is considered to be a non-custodial parent.
Exemptions that Can Be Claimed by Custodial Parents
While a custodial parent is entitled to claim the dependency exemption in a majority of cases, a noncustodial parent might be able to claim an exemption if the special rules for children of divorce or separated parent applies. This exemption only applies if:
- One or both parents provided more than half of the child’s total support for the year,
- One or both of the parents have custody of the child for more than half of the year, and
- The parents are divorced, legally separated, or lived apart at all times during the last six months of the preceding year.
If every one of these conditions is met and the custodial parent signs a “Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent,” which is also called an IRS Form 8332, then the non-custodial parent may claim the dependency exemption for the child.
Retain the Assistance of a Skilled Attorney
At the beginning of the year, many individuals in Georgia begin to think about the previous year’s tax returns. If you are one of the individuals in the state of Georgia who recently got divorced, preparing and filing your 2016 tax return will be significantly different from prior years. You are likely to have unique questions and concerns about how to properly file your tax returns, which is where the attorneys at Vayman & Teitelbaum, P.C. can help. If you find yourself in such a predicament, do not hesitate to contact our firm by either visiting our website online or calling the firm at 678-736-7700. Our firm will schedule an initial consultation and begin taking steps to help your situation reach a positive resolution.