When parents in Illinois get divorced, they might want to agree on who will be able to claim their children on future tax filings. Otherwise, if both parents claim a child, the IRS will accept the first return they receive. While it is possible to go through the agency’s customer service department to resolve the issue based on tie-breaker rules, the better alternative is to avoid such a dispute altogether.
In determining who can claim a child as a dependent, the IRS considers a parent’s claims over those of any other relative. If the dispute is between two parents, the agency will consider how much time the child spends with each parent. Usually, the custodial parent can make the claim, but if the parents share child custody, the next test is who has the higher income. The IRS assumes that in a joint custody situation, the higher-earning parent contributes more to the child’s care. If a custodial parent wants the other parent to claim the child, that parent can do so using Form 8332.
Under the Tax Cuts and Jobs Act, the personal exemption is no longer available. However, the Child Tax Credit was doubled by the reform bill. Custodial parents may also be able to file as head of household and claim the Earned Income Tax Credit and the Child and Dependent Care Tax Credit.
With help from legal counsel, divorcing spouses address other aspects of parenting in their agreement. For example, parents are often concerned about the child meeting someone the other parent is dating. Some parenting agreements set parameters about when a child meets a new partner. Parenting agreements may also address bedtimes, homework help or anything else that is important to parents and that helps them maintain consistent rules between households. For custody and visitation arrangements, parents may also want to consider making plans for vacations and holidays.