Child custody arrangements can be complex and emotionally charged, and when it comes to tax time, things can get even more complicated. One common question that arises in 50/50 custody situations is, “Who gets to claim the child tax benefits?” In this blog, we’ll delve into the rules and considerations surrounding child tax claims in shared custody situations. If you’re facing this issue and need expert advice, don’t hesitate to contact Beckman Steen Lungstrom, PA at 952-938-3411 for a free case evaluation and consultation. We are conveniently located in Minnetonka, Minnesota, and ready to help you navigate these challenging waters.
Understanding Child Tax Benefits
Before we discuss the specifics of 50/50 custody, let’s clarify what child tax benefits entail. In the United States, there are several tax advantages available to parents who have custody of their children. These benefits include:
- Child Tax Credit: This credit can reduce your federal income tax by up to $3,600 per qualifying child under certain income thresholds.
- Child and Dependent Care Credit: If you pay for childcare expenses while you work, you may be eligible for this credit.
- Earned Income Tax Credit (EITC): Low to moderate-income families may qualify for this credit, which can be substantial.
- Head of Household Filing Status: This filing status often provides more favorable tax rates than single or married filing separately.
Now, let’s explore how these benefits apply when custody is evenly split.
50/50 Custody and Child Tax Benefits
In a 50/50 custody arrangement, both parents share equal parenting time and responsibilities for the child. This balanced custody arrangement can lead to confusion regarding who should claim the child-related tax benefits. Here are some key factors to consider:
- Custodial Parent: For tax purposes, the IRS considers the custodial parent to be the one with whom the child resides for the majority of the year. If the child spends an equal amount of time with both parents, the custodial parent is the one who provides more financial support.
- Release of Claim: The non-custodial parent can claim certain tax benefits if the custodial parent releases their claim to these benefits. This release is usually done using IRS Form 8332.
- Negotiation: Parents can negotiate and agree upon how to split the tax benefits, such as alternating years for claiming the child tax credit.
- Dependency Exemption: As of my last knowledge update in September 2021, the Tax Cuts and Jobs Act suspended the dependency exemption for tax years 2018 through 2025. However, it’s crucial to check for any recent tax law changes that may affect this.
Seeking Legal Guidance From Beckman, Steen & Lungstrom
Navigating child custody and tax-related matters can be overwhelming, especially when dealing with a 50/50 custody arrangement. It’s essential to consult with legal professionals who specialize in family law and taxation.
At Beckman Steen Lungstrom, PA, we have a team of experienced attorneys ready to assist you. If you’re facing questions about child tax benefits in your 50/50 custody situation or any other family law matters, don’t hesitate to reach out to us for a free case evaluation and consultation. We are located in Minnetonka, Minnesota, and can provide you with the guidance and support you need during this challenging time.