The deadline for filing your income taxes is less than two months away. For many readers in Buffalo, the task will be about the same as it was last year, but those who got divorced last year may have many questions. For example, newly divorced and separated parents probably need to know if child support is taxable income.
The answer, as the Albuquerque Journal puts it, is no. This means that the custodial parent who receives child support need not declare it as income, and the noncustodial parent is not allowed to deduct the payments on his or her tax return.
Another tax issue for divorced parents is the child tax credit. Though both parents would like to claim this credit on their taxes, only one parent is allowed to do so. Generally, the custodial parent — the parent with sole or majority custody of the kids — gets to claim the credit. Even when the parents share equal custody, it is not possible for them to split the credit 50-50.
However, the custodial parent can agree to transfer this valuable credit to the noncustodial parent. The parents must agree to this in writing, usually during the divorce proceedings. In addition, the parents must both sign an 8332 form from the IRS. The non-custodial parent must include this signed document in his or her tax return.
Parents need not decide right now who gets the credit until the kids are grown. The IRS allows parents to alternate years, or negotiate each year who will get it.
A family law attorney may not be able to help you with your taxes, but an experienced divorce lawyer will help you get a fair share of the marital property, while also preparing for any tax consequences.