When a divorce takes place between partners with children, there’s a lot more to consider than just who will maintain custody of the child. One of the standard issues that I address with my clients is who will be able to claim the child as a dependent on their tax returns. After all, the tax credits associated with caring for a child can be substantial and may help a great deal with transitioning to the new life.
As usual I advise that I am not a tax lawyer and therefore for specifics about taxes everyone is advised to consult with tax professionals such as CPAs. This blog, however, is to outline some of the new concerns, after passage of the tax reform law, that people need to think about regarding children, taxes and child support agreements. Because of the new tax laws passed in December 2017 in the United States, the rules surrounding tax and support in New York divorces and everywhere will change dramatically, which could lead to more complex discussions between divorcing parties. For instance, in the past, it has been common for the custodial parent to claim for the child. The parties often make agreements that the non-custodial can claim the children or some of the time claim the child(ren) if he or she was responsible for a significant amount of child support. Now, as my last blog pointed out, that after 2018 maintenance (alimony) payments will no longer be able to be deducted from income for tax purposes, it may be that child support paying party might find the dependent claim more important than in the past for tax purposes. The deductibility of child support payments is not changing as still child support payments are not deductible for child support purposes and it is not income for the recipient. Continue reading