Tax Deductions After Divorce: Who Claims the Child?

With tax season just around the corner, it is important that people understand the impacts a divorce can have on tax exemptions for their child.

Many people are already aware of the tax benefits that come from claiming a child on your year-end taxes. These benefits include a federal tax credit of up to $2,000 per child, deductions at the Michigan state level, and other potential benefits. Hence, it is no wonder that who can claim the minor child when a marriage is resolved is often a highly contested matter.

The Internal Revenue Service has codified instructions for parents facing this issue. The Internal Revenue Code (IRC) § 152(e) states that the parent who has physical custody of the child for more than half the year (custodial parent) is automatically entitled to claim the dependency exemption. This means, pursuant to the IRS, if you have the child for even one day more than your former spouse, you are entitled to claim the child on your taxes.

The Michigan Child Support Formula provides similar guidance. Pursuant to § 2.07(B)(3) of the guidelines, “In the absence of an explicit written agreement or order to the contrary, presume that the person with whom the child resides for the majority of a calendar year claims the dependent tax exemption for that child.”

It is crucial to note that there are some exceptions. Both the IRC and the Michigan Child Support Formula allow for the parties to enter into a written agreement as to who will claim the minor child. This is frequently in the form of a stipulation or consent judgment. Many parents agree to either split multiple children (each claiming one) or alternate years. This can be a useful negotiation tool when finalizing a divorce.

Lastly, in the matter of Fear v. Rogers, the Michigan Court of Appeals stated that a circuit court judge has the general authority to award the federal income tax dependency exemption for the minor children to either party.

The end of a marriage can be an emotional and stressful process. There are many nuances to the parting of ways that make having an experienced attorney necessary. The attorneys at Grewal Law PLLC are well-versed in the practice of family law and provide a compassionate approach to legal counsel.

Contact Grewal Law PLLC online today. We are also available to take your call at (888) 211-5798.