Tuesday, February 12, 2008

Claiming The Kids On Your Taxes

One of the issues that arises in divorce, no matter what tax bracket you are in, is who is going to get to claim the kids on their taxes. The person paying child support believes that they should be entitled to that deduction and the person who is the primary residential parent for the child also believes they are entitled to that deduction. Who is right? Well, according to Federal Law, the person who is designated as the primary parent, or the person with whom the children primarily reside, is allowed the dependency exemption. However, this is always subject to negotiation, and more often than not, the parties agree to alternate the deduction on an every other year basis. This is always used as a negotiation tool and can be used as leverage for other things that you may want in the divorce. Before you stall the divorce process because you want the dependency exemption and your spouse is refusing to give it up, you may want to see whether the exemption is actually going to be beneficial to you or not. The following blog from a Pennsylvania Family Law website explains how the exemption and the child tax credit works. However, as in any major financial decision, you should consult with a financial planner or CPA before agreeing to waive any right to a dependency exemption.

No comments: