One of the issues that divorcing parents have to tackle involves an allocation of the income tax exemptions for the minor children. Who claims who? This is a matter that should not be overlooked; tens of thousands of dollars in future tax benefits may be at stake. And, if both parents make the same claim in the same year, a phone call from the IRS is certain to follow.
According to the tax code, a parent who cares for the children more than six months out of the year is the parent who has the right to claim a child as a dependent.
Oddly, even though federal law trumps state law, Minnesota judges often award exemptions to parents who care for a child for less than six months out of the year. It is not uncommon for a non-custodial parent to be awarded the right to claim a child as a dependent. Judges often cite the notion that both parents are liable for supporting the children and, therefore, both parents should be able to realize the economic benefits located within the tax code.
If the parties have an odd number of the children, the exemptions are often allocated so that each parent claims the same number of the children, with the remaining child rotated each year.
If the parties have an even number of children, the exemptions are divided equally, until the oldest child emancipates. Thereafter, most parties begin rotating the “odd” child.
In rather rare situations, the Court may allocate the exemptions on a year-by-year basis. Each tax season the parties must meet with the Court, with the task of demonstrating some tangible economic benefit in claiming an exemption. If one party realizes no benefit, and the other does, the Court is likely to award the exemption to the benefitted party for that particular year.
Many parents claim emancipated children as dependents on their income tax return, especially in situations in which a child is attending college. Once a child turns 18, the child (now an adult) may decide which parent will claim the dependency exemption. Or, the child may choose to claim themselves, for purposes of their own individual income tax return.
The fact that a custodial parent is often required to give up an income tax exemption isn’t necessarily a bad thing. Usually, a non-custodial parent’s right to claim such an exemption is contingent on being current in all child support obligations on December 31 of the relevant tax year. This added incentive can ensure that timely support payments are made.
Tax season is upon us. Do you have a question about the income tax exemptions related to your minor children? Our experienced divorce and family law attorneys are here to help. Call (763) 323-6555 to arrange a consultation.