As we approach the end of the calendar year, taxes are on everyone’s mind. Perhaps people are thinking more about taxes than usual because of the passage of the new tax law by Congress at the end of 2017. To many who have been through a New York divorce or separation, the tax implications of dissolving a marriage are incredibly important and must be part of the overall discussion regarding other issues, such as the division of assets and child custody.
One issue that frequently arises in New York divorce cases is which parent is able to claim a child or children as a dependent for tax purposes. The ability to claim a child as a dependent can have a significant effect on a party’s tax liability.
For the most part, only one person can claim a child as a dependent on their tax return. However, a custodial parent can waive their right to claim certain benefits, such as the child’s personal exemption, the child tax credit, and the tuition and fees deduction. Notably, a custodial parent could still retain the head-of-household filing status, the child and dependent care credit, and the earned income credit. However, according to the IRS, if the parties have multiple children the parties can either agree on how to split up the dependency credits or a court may make that determination.