Georgia parents who get a divorce may run into some conflict when tax time arrives if they have not agreed on who will claim the child as a dependent on their taxes. If both parents claim their child, the IRS accepts the claim on the first return received.
In a dispute, parents must go through a lengthy process to get a resolution. Usually, the parent who has the child at home most often has the right to claim the child as a dependent. However, in some cases, parents may share custody, and the child may spend roughly an equal amount of time with each of them. The IRS would then look at the adjusted gross income for each parent and grant the right to the parent who has the higher income. The reason for this is that the agency assumes a parent who earns more is also contributing to the child’s support more.
A custodial parent may waive the right to claim the child as a dependent by filling out IRS Form 8332. This waiver can be for one or multiple years.
The passage of the Tax Cuts and Jobs Act changed what parents can claim. With the personal exemption eliminated, parents can still take the Dependent Care Credit, and the Child Tax Credit doubled to $2,000.
Parents who have multiple children sometimes agree that each of them will claim some of the children on their taxes. If there is only one child or an odd number of children, parents might take turns claiming that child. The TCJA introduced additional provisions that will affect people who divorce. Traditionally, the person paying alimony was able to deduct the payment from taxes and the recipient had to claim the alimony on taxes, but this is no longer the case. This could mean that people receive less in spousal support in the long run. An attorney may be able to explain the tax-related implications of a client’s divorce agreement.