(801) 254-9450 A 50/50 custody arrangement may split parenting time almost equally, but federal tax rules do not simply divide the available child-related tax benefits in half. The IRS applies its own rules to determine which parent qualifies as the custodial parent and which benefits each parent may claim. It is important to understand how this works before finalizing your divorce, and our skilled child custody attorneys at Carr | Woodall are here to help.
This distinction can surprise parents who assume that a state custody order describing equal parenting time automatically controls their federal tax returns. Our team is available to answer your questions about 50/50 child custody and taxes in Heber City.
For federal tax purposes, the IRS generally considers the custodial parent to be the parent with whom the child lives for the greater number of nights during the calendar year. The agency treats the other parent as the noncustodial parent.
This means a Heber City parenting plan meant to provide 50/50 child custody may not produce an equal overnight count in a particular tax year. The result could be a relatively even split that gives one parent all of the tax breaks that come with being a primary parent. Our attorneys can explain how your parenting plan will impact your taxes.
An exact tie is possible, particularly in a leap year or in circumstances where some nights do not count toward either parent. The IRS has a specific rule for this situation. If the child spends an equal number of nights with each parent during the year, the IRS treats the parent with the higher adjusted gross income as the custodial parent.
IRS Form 8332 allows a custodial parent to release certain claims relating to a child so that the noncustodial parent can claim specified federal tax benefits. The release can apply to one tax year, specified years, or future years. The result is that the parents have the power to negotiate a split of the tax benefits that come with having a child. This can be useful when divorced parents agree that the noncustodial parent should claim the child for certain tax purposes. For example, parents may agree to alternate years in which the noncustodial parent receives the released tax benefits.
Form 8332 does not transfer every child-related tax benefit. A valid release can allow the noncustodial parent to claim the child tax credit, additional child tax credit, or credit for other dependents if they meet the applicable requirements. An attorney can explain how this form may affect taxes for Heber City parents considering a 50/50 child custody arrangement.
Head of household status can provide a more favorable standard deduction and tax rates than filing as single, but simply having a 50/50 child custody order does not automatically qualify a parent in Heber City to use this filing status.
Among other requirements, a taxpayer generally has to be unmarried or considered unmarried at the end of the year, pay more than half the cost of keeping up the home, and have a qualifying person live in the home for more than half the year.
That last requirement makes the actual parenting schedule important. A child generally cannot qualify both parents for head of household status based on the same child’s residency for the same year.
When creating a parenting arrangement, it may be easy to overlook tax issues. If you have questions about your obligations, reach out to Carr | Woodall today to discuss 50/50 child custody and taxes in Heber City. Our attorneys are available by virtual appointment or are willing to travel to meet you as needed. We prioritize accessibility to help as many families as possible with their family law disputes and concerns.