Tax Filing for Divorce With Dependents

Custodial parents claim their children on their taxes unless certain stipulations apply.

When divorced parents complete their taxes, only one of them can claim their children as dependents. Only the person who claims the children as dependents can receive tax credits and deductions related to the children. Typically, the parent with whom the children live with claims the children and the other parent does not.

Custodial Parent

In many cases, one parent is considered the custodial parent. The custodial parent is the parent whom the children have resided with for the majority of the year. If the children lived with both parents an equal amount of time, the custodial parent is the one with the higher adjusted gross income. The custodial parent is the parent who claims the children as dependents.

Noncustodial Parent

Generally, the noncustodial parent cannot claim the children as dependents. However, if all four of the following conditions are met, the noncustodial parent may claim the children as dependents: the parents are legally separated, divorced or have been living apart for at least six months; the noncustodial parent provided more than half of the children's support during the year; the children are in the custody of one or both of the parents during the year; and the custodial parent signs a written agreement (Form 8332) stating that he or she will not claim the children on his or her own taxes.

Credits

Only the parent who claims the children can take the child tax credit. The maximum amount of this credit as of 2011 was $1,000 per child. The credit is reduced if your modified adjusted gross income is more than $75,000.

Deductions

If you claim children on your tax return, you can deduct child care expenses. The amount of deduction is equal to 20 percent to 35 percent of the money spent on child care. If you earn less than $15,000 per year, the deduction will be equal to 35 percent whereas if you earn more than $43,000 per year, the deduction will be equal to 20 percent. The deduction amount decreases incrementally from 35 percent as your income increases.

References

• IRS.gov: Publication 501 Exemptions, Standard Deduction and Filing Information
• IRS.gov: Child Tax Credit
• IRS.gov: Child and Dependent Care Expenses