Planning for taxes after divorce

Pennsylvania parents who decide to divorce may consider many factors relating to how the end of the marriage might affect the parent-child relationship. From child custody and visitation to negotiating an amicable co-parenting framework, divorcing parents do a great deal of work to prepare for their future. One issue that people may not consider immediately is how the divorce might change their tax filings.

Of course, people who divorce must now file their taxes as single rather than jointly as a married couple. In addition, only one parent can claim each child as a dependent per year. This can be important because it provides access to key tax credits like the Child Tax Credit, the Child and Dependent Care Tax Credit and the Earned Income Tax Credit. After the changes to tax law introduced by the Tax Cuts and Jobs Act, these credits are more important than ever to achieving important tax savings. In addition, a parent who can claim a child as a dependent can file using Head of Household status.

Many parents negotiate who will be able to file for the children during the settlement process. In some cases, the parent with primary physical custody may be able to file; other parents may opt for the parent with a higher income or greater financial role. If the parents do not reach an agreement among themselves, the IRS will reject any second tax return they receive that claims the same person as a dependent. This can lead to a complicated and lengthy procedure to resolve a dispute.

Taxation can be another important issue to address in the divorce negotiations process alongside other key issues like property division, spousal support and child custody. A family law attorney can advise clients about key issues and work to achieve a fair settlement.


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