Tax time is upon us once again in the U.S., and with this comes many questions regarding child support and income taxes. In most cases, divorce and child custody settlements will specify which parent can claim children as dependents, how they will file their final tax return, and how any payment due or refund to be received is allocated. Making sure these stipulations are specifically agreed upon and executed will help prevent a host of problems that can occur.
In the state of Maryland, the custodial parent is the one with the right to claim the dependents, unless an official exemption has been filed with the Internal Revenue Service. This exemption must specify which years the non-custodial parent will be entitled to the exemption, and must also be signed by the custodial parent. For tax return purposes, the non-custodial parent will file as a single person and the custodial parent will file as the head of household. The best case scenario in the situation wherein there is more than one child is to have each parent file as head of household, claiming one or more children as dependents.
Taxes and Joint Custody
The tax situation can become a little tricky in cases where divorced parents share joint custody of their child. In most cases, the court mandates that the couple takes turns claiming the child as a dependent, alternating years between them. In the event that there are multiple children in a shared custody arrangement, the parents typically rely on splitting the children between each parent for tax deductions.
But what happens to parents that separate and live apart, yet were never legally married, or those that continue to share residence but are not married? Who can claim the child as a dependent on their income tax? In these cases, the parent that provides more than 50 percent of the support for the couple’s child will be eligible to claim the child as their dependent. In the event that neither one of the parents provides more than 50 percent support, then a divorce lawyer will need to handle the process of disputing the claim if the couple cannot come to an agreement.
For either parent filing taxes where child support is involved, it is important to note the restrictions on tax exemptions and responsibilities for this money. While alimony payments must be reported as income by the receiving spouse in a divorce, child support payments are not taxable income. The spouse receiving the child support payments does not report this money as income, and the paying parent cannot claim these payments as a tax deduction.
Towson Child Support Lawyers at Huesman Jones & Miles, LLC Provide Legal Counsel and Representation to Divorcing Couples
If you or someone you know is considering divorce where children are involved, the experienced Towson child support lawyers at Huesman Jones & Miles can provide the legal counsel and representation you need. Our team is committed to helping our clients reach amicable divorce and child custody settlements as quickly and as stress free as possible. Call us at 443-589-0150, or contact us online to schedule a consultation today.