How Does Divorce or Separation Impact Tax Dependents?

Divorce or separation is stressful, but so are income taxes. You may not have even thought about the tax implications of a divorce, but they certainly exist. While we at The Kronzek Firm are not tax attorneys, we know that taxes can have a big impact on the lives of our clients in Michigan. Our family law attorneys in Oakland County and across Michigan will look at the full picture of the impact divorce or separation can have on your income taxes. 

Tax Dependents and Credits 

One of the most common questions we get about taxes and divorce is the impact on dependants and the federal and state income tax credits you may receive. It is important to remember that a child can only be a dependent for one taxpayer in a tax year. This can naturally be a problem when parents who are divorced or separated both would like to claim a child as a dependent on their taxes. 

Usually, a child for tax dependent purposes must be under the age of 19, or under 24 if they are a full-time student. Generally, the child will be the dependent of the custodial parent, or where the child lived more than half during the year. A judgment of divorce should specify who will be claiming a child as a dependent and when, based on the specific facts of that case. 

Taxes are already difficult, and a divorce or separation can make tax season even harder for families. Tax credits are just another thing that should be negotiated in a divorce or separation. These are very important details and they can be easily missed if not done with an experienced divorce attorney

Other Important Tax Credit Notes

Being able to claim a dependent on your taxes is certainly a financial benefit to most parents. It is important to consider other benefits when you decide to divorce or separate. One thing to remember is that when you file taxes as a married couple, you file them jointly. When you decide to end that marriage, you will be required to file separate tax returns. There are many benefits that can come with filing jointly, so you must be aware of that and it may possibly impact your desired timeline. Depending on the particulars of your financial picture, one parent may benefit more than the other parent by being able to claim the dependent care exemption on the income tax return. 

So, how do we know which parent gets to claim a dependent care exemption in a particular family? That answer can get a bit complex, but in a nutshell, the Internal Revenue Service (through the IRC or Internal Revenue Code) says the exemption goes to the parent that provided more than half of the support to the child. However, the tax code goes on to allow state courts to modify that provision by awarding the exemption in a different way. Experienced family law attorneys usually do an initial analysis to determine what works best for their clients in a given situation. 

There are many other tax implications flowing from a divorce and separation that do not involve dependent credits. Check out our website to read more about additional tax consequences of divorce

Our Attorneys Take Care of the Details

You know that taxes are complicated, and so do we. That is why at The Kronzek Firm, we will be sure to cover all of the details in your divorce or separation that you might not have thought of. Our goal is to resolve issues the first time around whether you are in Oakland County, Macomb County or Livingston County. About 96% of all our family law cases get settled without need for a divorce trial. That is what you get when you hire a top family law attorney. We’ve been handling divorce, custody and family law cases in Michigan since the last century. Our office is located on Northwestern Highway in Farmington Hills. Contact us today for a free initial consultation at 248-479-6200.