Who is claiming the Child Tax Credit is one of many questions that can come up during the divorce process. The Child Tax Credit, a tax benefit for parents, can significantly reduce the tax burden of the parent claiming it. Determining which parent is entitled to claim the credit depends on custody arrangements, the tax code, and agreements made during the divorce process.
What is the Child Tax Credit?
The Child Tax Credit is a federal tax benefit that helps parents offset the costs of raising children. For each qualifying child under age 18, the credit lowers the amount of federal taxes that parents will owe. Occassionally, parents may receive a portion of the credit as a refund if they owe little to no tax. However, the amount of the credit can vary based on income and other eligibility criteria.
The custodial parent is typically entitled to claim the Child Tax Credit. The IRS uses the following criteria to define the custodial parent:
- The child resides with the parent for more than half of the year.
- The parent provides the primary care and financial support for the child.
However, exceptions can allow the non-custodial parent to claim the credit under certain conditions.
When Can the Non-Custodial Parent Claim the Credit?
The non-custodial parent can claim the credit if the custodial parent agrees to transfer the right to claim the credit. The custodial parent must complete and sign IRS Form 8332, which releases their claim to the credit. The non-custodial parent attaches this form to their tax return to claim the credit.
While the credit generally goes to the custodial parent, significant financial support from the non-custodial parent may influence agreements or court orders. Parents may also agree to divide tax benefits. For example, one parent claims the Child Tax Credit while the other claims another benefit, such as the child’s education credit.
Resolving Disputes Over the Child Tax Credit
Disputes can arise when both parents attempt to claim the credit. If this happens, the IRS will investigate and apply a tiebreaker rule:
- The parent with whom the child lived the longest during the year is entitled to the credit.
- If the child spent an equal amount of time with both parents, the parent with the higher adjusted gross income (AGI) is able to claim the credit.
To avoid disputes, parents should clarify in their divorce agreement or custody plan who will claim the credit.
Tulsa County Family Law Attorneys
The Child Tax Credit is a valuable benefit, but determining who gets to claim it after a divorce requires careful consideration of custody arrangements, IRS rules, and any agreements made during the divorce. To avoid disputes and ensure compliance, it is essential to address tax benefits during the divorce process and document agreements in writing. If you have questions about claiming the Child Tax Credit, contact us today at Tulsa Divorce Attorneys & Associates by calling 539-302-0303 or contact us online.