Tax Claims and Parenting Plans: What You Need to Know Before Filing

With tax season upon us and April 15th around the corner, knowing your deductions and how to file them is key to succeeding with your tax claim. Child deductions can be complicated when a divorce occurs with dual custody and sharing expenses. Being prepared can alleviate the stress of filing. Below are some tips to help parents navigate this process.

Child Tax Credit for 2021

Due to the American Rescue Plan, the Child Tax Credits for 2021 have increased from the previous year. Parents can get a child tax credit for each dependent child under 17. The tax credit for children ages five and under is $3,600, and for children ages 6 through 17 is $3,000.

Splitting Tax Credits

The Child Tax Credit can be split by parents even if one parent has received the total amount during the filing year. If a joint return was filed, then a divorce occurred, parents should split the stimulus equally. If parents are not joint filing and only one parent received the Child Tax Credit during the filing year, the other parent can still claim their portion on their 2021 return.

Divorced Parents Claiming Children on Their Tax Returns

Only one person can claim your child on their yearly tax returns. A Marital Settlement Agreement can determine how parents claim a child when having joint custody. One suggestion would be alternating each year. It is usually more beneficial for the higher-income parent to claim a child. However, if a parent’s income is too high to prevent them from obtaining the Earned Income Credit or Child Tax Credit, the other parent should claim the child.

Claiming a Child With 50/50 Custody

Having custody of a child may entitle parents to certain deductions and tax credits. Typically, the parent with whom the child lived most of the year and will receive the tax credit is defined as the custodial parent. A child can be claimed as a dependent if they are a qualifying child for the custodial parent. Parents having 50/50 custody can have agreements on who claims a child year to year. With an odd number of children, parents can take turns each year on who claims the more significant number alternating years. When you have multiple children, they can be divided between each parent when filing. Having a parenting plan designating who can claim a child on their taxes takes away from any uncertainty.

Head of Household Filing Status

Filing as Head of Household is defined as having a lower tax rate and a higher standard deduction than if you were filing as single. The IRS will consider you are unmarried and meeting the following criteria:

• You don’t file a tax return with a spouse.
• You have paid more than half the expenses of maintaining your home the past year.
• You did not live with a spouse (current or former) for the last six months of the tax year.
• You have paid more than half the expenses of maintaining your home the past year. You provided the primary home for your child for at least six months of the tax year.
• You can claim the child as your dependent.

Contact a Responsive, Assertive, and Accomplished Attorney

The Law Office of Christopher H. Morrison is a trusted family law firm protecting families and businesses for over 30 years in Winter Park, Orlando, Sanford, Longwood, and Altamonte Springs, Florida. We also serve Seminole, Orange, Lake, and Osceola counties. Our practice areas include marital and family law, commercial litigation, and personal injury. When you need experienced, knowledgeable, and compassionate attorneys, we will deliver practical solutions for your legal needs. We invite you to call (407) 539-2597 to schedule an initial consultation.