When spouses in Colorado decide to divorce, they may wonder how the end of the marriage will affect their income tax filings. Of course, people will begin filing again as single rather than married, but claiming dependents can be a more complicated process. In some cases, both parents want to claim a child as a dependent on their taxes. The parent who can claim the child as a dependent will access credits like the Child Tax Credit, the Child and Dependent Care Tax Credit and the Earned Income Tax Credit as well as be eligible to file as the Head of Household.
In many cases, parents specify who can claim the children as dependents in the divorce or custody agreement. If the parents have two or more children, they may distribute dependent status between both parents as part of the agreement. However, when families do not make this decision for themselves, the IRS has to make it for them. In this case, the tax agency will use several factors to assess the validity of the claim. First, parents have a higher priority than non-parents. Second, the parent with whom the children live the longest can claim them. If the parents have shared or equal custody, the ex with the higher income would receive the priority, assuming they have actually provided more support.
The IRS does not mediate these disputes for parents. In general, the first person to file a claim will receive the credits and the second will have the return rejected. An additional step would be necessary for the IRS to decide.
There are a number of factors that can complicate divorce, especially for parents. A family law attorney can help divorcing parents reach an agreement about a range of legal issues, from tax filing concerns to child custody.