Tax Time, Divorce and Who Gets to Claim the Children as Dependents

By February 20, 2019Blog

It is tax time again and nobody likes a surprise letter from the IRS saying he/she owes more taxes.  When your divorce is over, you want to be sure that you don’t later discover you owe taxes that you weren’t expecting to pay.  A number of tax issues may arise in your divorce.  Your attorney may not be able to answer all of your tax questions, so consulting your accountant or tax advisor for additional advice might be necessary.  Taxes are important considerations in both settlement negotiations and trial preparation.  They should not be overlooked.  Taxes can impact many of your decisions, including those regarding alimony, division of property, and the receipt of benefits.

The judge has discretion to determine which parent will be entitled to claim the children as exemptions for income tax purposes.  Where child support has been ordered pursuant to the Michigan Child Support Guidelines, many judges order the exemptions be shared or alternated.  However, most judges will order that the payor of child support be current on his/her child support obligation to be eligible to claim the income tax dependency exemption.  Additionally, if one party has income so low or so high that he/she will not benefit from the dependency exemption, the court may award the exemption to the other parent.

Be sure to ask the professionals helping you about the tax implications in your divorce so that you don’t get a letter from the IRS.