Tax season is upon us, and for parents in Grand Rapids who divorced in 2019, filing their taxes in 2020 may be very different than it had in years past. Child custody and other divorce legal issues can change the way a parent who has gone through a divorce files the taxes. The following is a review of some topics to consider when filing your taxes if you are a parent who divorced in 2019.
First, the Internal Revenue Service (IRS) will only allow one parent to claim their child as a dependent. This can be accomplished in several ways. For example, if parents have more than one child, following a divorce one parent can claim one child as a dependent and the other parent can claim the other child as a dependent. Or, one parent can claim all children as dependents, while the other parent will not claim any dependents.
These details should be considered when negotiating child custody, so that the outcome of any agreement is fair to both parents. If parents cannot agree on who will claim the child as a dependent, the IRS will generally consider the parent with whom the child resides with most the time to be the parent who can claim the child as a dependent.
The tax consequences of paying or receiving child support have also changed in 2020. As of this year, those who have divorced in 2019 and have paid child support cannot deduct those child support payments on their 2020 tax return. In addition, the parent who received child support in 2019 does not have to include these payments as income on their 2020 tax return. In this sense, child support is considered tax-neutral, not unlike personal expenses.
These are only some considerations newly divorced parents will face when filing their 2020 taxes. Ultimately, parents need to ensure they understand what their rights are following a divorce. Child custody issues can go beyond simply who the child lives with and when – they can affect taxes too. Michigan family law attorneys can help parents going through a divorce understand their options, so they can make informed choices moving forward.