Is Claiming a Child on Taxes Affected by Custody?

Being a divorced parent is a difficult prospect. You must manage the stress of sharing parenthood with someone to whom you are no longer in a loving relationship, and with whom you may even have a quarrelsome relationship. You must navigate issues of child support, conservatorship, and who gets to make decisions regarding schooling, doctors, extracurricular activities, and every other aspect of day-to-day life.

The courts in Texas often award joint custody to parents, also called a 50/50 conservatorship. A 50/50 conservator arrangement is not, however, quite as straightforward as it sounds. Sometimes this arrangement still favors one parent over another. For example, only one parent may legally claim a child on their taxes to get a child tax credit in any given year. Sometimes, parents do not realize what they are sacrificing until it is too late.

That is why it is so important to have a qualified Dallas divorce and family law attorney in your corner. The right attorney can help you come to a favorable custody agreement with your spouse, help you determine who can claim a child dependent on your taxes, and ease the financial strain of childcare.

How Does Conservatorship Work in Dallas?

In the state of Texas, conservatorship is the term that refers to those in charge of the child who make major decisions about the child. It comes in two varieties: managing and possessory conservators. These terms are essential parts of child custody under Texas family law.

Managing conservatorship means spending time with the child and being responsible for them on a daily basis. Possessory conservatorship means only spending time with the child, without making legal decisions for them.

The state of Texas prefers that both parents have joint managing conservatorship when making decisions for children. Because of this, the state prefers issuing court orders that award joint managing conservatorship in a divorce decree, with the parents serving as joint managing conservators. The sole exception is when it would put the child’s physical or emotional health and well-being at risk.

Often, to avoid arguments over important issues like healthcare, these decisions will be written into the custody agreement. Determining, for example, who your child’s doctor will be, where they will go to school, and the like before the divorce is finalized, and making it a formal part of the divorce decree, can prevent many arguments in the future.

You may have heard the term “custody” or terms like “custodial parent” and “noncustodial parent.” This is the same thing. In Texas, “conservatorship” is the legal terminology used to determine who makes decisions for the child. Texas does not use the term “custody” in this way as other states do.

Can I Claim My Child as a Dependent?

IRS rules are very specific regarding who can count as a dependent child. These rules state that a qualifying child must be under the age of 19 by the end of the year, under the age of 24 if a part- or full-time student, or permanently and totally disabled. In addition, according to the IRS, the qualifying child must not have provided more than half of their own support for the year.

Who Claims the Child on Taxes With a 50/50 Shared Custody Arrangement?

It is, again, important to understand that Texas does not use the term “custody” in terms of making decisions for the child. Where other states use terms like “legal custody” and “physical custody,” Texas only uses conservatorship. Managing conservatorship refers to the parent who has the right to make decisions regarding the child’s health and well-being, the schools they attend, where they go to the doctor, and other life decisions.

In other states, physical custody refers to the parent with whom the child is physically spending their time. It is not the same thing as conservatorship. The idea of one parent being the custodial parent while the child’s other parent is the noncustodial parent is how other states legally determine such agreements.

In such states, it is possible for parents to share custody and thus have joint conservatorship. Only one parent, however, counts as the custodial parent in a 50/50 custody arrangement. It is this parent who gets to claim the IRS tax credit.

Who Is the Custodial Parent in 50/50 Joint Custody?

When talking about taxes, it is important to look at federal laws as opposed to state laws. Federal tax law is less concerned with who makes decisions for the child, and more concerned with where the child lives.

Put simply, in federal tax terms, the IRS considers the custodial parent to be the parent with whom the child has lived for the most nights in a given tax year, or the parent with whom the child spends the most physical time. This custodial parent is the person who the IRS assumes will be claiming the child on their tax forms, and this is a key factor to remember, as most other aspects of claiming a child dependent flow from this assumption.

In Texas, the parent who gets to claim the child on their tax return, or who is in IRS terms the custodial parent, is the one designated as the primary conservator in the divorce decree, or the parent who has possession of the child for the most nights in a year.

Even in joint managing conservatorship arrangements, the courts often deliver a roughly 55/45 parenting time division for possessory conservatorship. This is the typical visitation on every other weekend and every other holiday. The 55% parent can claim the child. The specifics can differ (80/20, 60/40, etc.), but whatever the division, the parent who has more physical time is usually the custodial parent for purposes of your IRS form when filing your federal tax.

Tiebreaker rules also exist. If the child spends equal time with both parents, the parent with the higher adjusted gross income (AGI) is considered the custodial parent. Thus, for tax purposes, tiebreaker rules state that the parent with the higher AGI can claim the dependent child on their tax return

Can Both Parents Claim a Child on Taxes in Dallas?

No, both divorced parents cannot claim tax breaks for a child in the same tax year. A child can be a dependent of only one taxpayer in any given year, providing tax deductions only to that taxpayer, according to IRS tax laws.

Normally, the custodial parent can claim the child on their tax return, unless the noncustodial parent meets the qualifications for a special rule. This special rule requires that the custodial parent completes IRS Form 8332, or a similar statement, and the noncustodial parent attaches this form or a similar statement to their tax return. It is important to note, however, that the release of claim via Form 8332 does not allow the noncustodial parent to use the child to claim head of household filing status, earned income tax credit, or eligibility for other child-related tax credits.

Parents can also agree to alternate who gets to claim the child, with each claiming tax benefits for the child in alternate years. If you have multiple children, you can agree that one parent claims some of the kids and the other claims the rest. Whichever method or arrangement you and your spouse agree to use, it’s crucial to have everything in writing to avoid battles, misunderstandings, and even IRS audits in the future. For the clearest agreement, write it into your divorce decree or separation agreement.

If both parents try to claim the same child on their tax returns, the IRS will reject one or both. If you file automatically, this rejection will happen automatically. If you file by mail, you will get a paper notice. Regardless, both parents will be notified that their return has been flagged.

One of the parents, in this case, will need to resubmit an amended tax form to correct the error. Failure to do so can result in an IRS audit, which will use tiebreaker rules to determine who has the right to a dependent. IRS audits are not only time-consuming, but they are also stressful and can be expensive, especially if the agency discovers that you have other errors on your tax returns in recent years.

In the end it is best, however contentious your relationship with your ex-spouse might be, to abide by the proper rules and regulations regarding custody and child tax credits. Always keep everything in formal writing regarding the decisions made in this area.

Can a Father Claim a Child on Taxes Even if the Child Does Not Live With Him?

A father, or any parent who lives separately from their child, may claim the child on their taxes. This requires, however, that they qualify for the special rule. This means that they have signed Form 8332, and they provide more than 50% child support.

How Can I Prepare to File Taxes as a Divorced Parent in Dallas?

Preparing to file taxes as a divorced parent in Dallas, Texas is not much different from preparing to file taxes under any other circumstances. Be aware of the common custody arrangements and tax laws, the difference between custody in a federal sense and conservatorship in the state of Texas, and how they affect your filing status. Work with your accountant to ensure your tax filing is completely accurate so the IRS will not deny your tax form, your ex-spouse’s tax form, or both.

Finally, make sure you work with a Dallas family lawyer to work out the best possible joint conservatorship for your spouse, you, and your children. This is even more important if you believe it essential that you are involved in more decisions pertaining to your kids.

If you have an unfavorable custody arrangement in existence, a good family law attorney may be able to help you to get the arrangement modified, so it favors you more. IRS Publication 504, Divorced or Separated Individuals, is essential reading for any divorced couple dealing with child custody, conservatorship, and tax issues.

It can be incredibly intricate to determine who gets to claim the child on their tax form when you have a joint conservatorship, especially if you are unaware of the current IRS rules. You can work out something with your ex-spouse regarding these issues, but it can be a rocky process to navigate. Put simply, you must be certain that you are on the right side of the IRS tax code. Failure to do so can result in not only a rejected filing but also an audit. The right accountant, and the right family law and child custody attorney in Texas, can be vital in this process, so reach out to us for help!

Reaching Fair Agreements for Dallas Parents Since 1993

In our experience, too many people think that having an attorney means you are gearing up for a fight. In truth, an attorney can help smooth over legal proceedings and be a great help in negotiating fair agreements. The right attorney can be a calm voice of reason when it comes to issues of child custody, whereas you might be too emotionally involved to evaluate various perspectives. Your attorney will always fight for your rights, but they will also help you realize what is in the best interests of your child.

Sometimes, attorneys can help both parents come to agreements that preserve some level of privacy, respect, and dignity between them. If you are engaged in a custody battle and need help securing your parental rights, the Law Office of Chris Schmiedeke, P.C. is ready to listen. We have a track record of success, we greatly value our relationship with our clients, and we can be a compassionate and knowledgeable ear, eager to listen. We are always happy to provide legal advice. Get in touch with us using our online contact form, or call us at 214-643-8904 to schedule a consultation about your case today.