We hear this a lot from our clients around tax time: “When I filed my taxes in April, I was surprised to find out that my ex claimed the kids when it was my turn. Now what?”
If you and your ex both claim your kids on your taxes, there are a few outcomes (as well as solutions) when you’re both claiming a dependency deduction. This is important to note: If both you and your ex filed for the deduction, whoever files second will automatically be rejected by the IRS, even if you’re the custodial parent and legally entitled to receive the refund.
Here are the basic steps you’ll need to take, if you and your ex both claimed your kids on your tax returns.
- Double-check that you’re entitled to claim a dependency deduction. From a legal perspective, first, be sure that you’re the custodial parent of your child. That generally means that the child is related to you, and is under age 19 or is a full-time student under age 24. In addition, you have sole or full custody of the child and you contribute at least 50% of the child’s total financial support. Finally, the child lives with you the majority (at least 50%) of the time per your custody arrangements; even if your child lived with you 183 nights vs. your ex’s 182, you’re considered the custodial parent for that tax year. However, if the child spends the same amount of time with both parents, the IRS considers the parent with the highest adjusted gross income to be the custodial parent.
Second, review any agreements that you and your ex have in place for claiming exemptions as part of your divorce decree. If parents share custody, for example, these agreements might include that exes might each claim different children as dependents each year, or alternate years when they can claim dependents. In another scenario, the noncustodial parent who earns more and contributes more to child support might save more on taxes if they’re awarded the exemption, so the exes decide to go that route.
Be aware that for tax filing purposes, though, divorce decrees aren’t enforceable. The IRS adheres to federal laws for dependent deductions. That means when you and your ex file competing claims, the dependency exemption reverts to the custodial parent. If you and your ex have an agreement in a particular year for the noncustodial parent to claim your kids as dependents, you’ll need to make it official. The custodial parent needs to sign IRS Form 8332 “Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent” giving up their legal claim to the dependency exception. The noncustodial parent must then attach a copy of the signed form to their tax return to prove they can claim this exemption.
- If you’re certain you have the right to claim your child as a dependent that tax year, complete a paper tax return claiming your child and file it by mail. Include any documentation or records that will help your case.
- If you or your ex filed incorrectly, the IRS may process both returns and issue refunds per the claims. However, both you and your ex will ultimately receive letters from the IRS noting that there’s a conflict in dependency claims, requesting documentation to resolve that issue. We recommend that you prep that documentation as soon as possible and return it to the IRS.
- Wait for the IRS to decide which parent can claim the child. Once the IRS makes a determination, the parent who filed incorrectly will need to return any taxes, fees or interest owed without this exemption.
If your ex made a legitimate error in filing for the dependency deduction this year, there are a few amicable solutions: Require your ex to refile their taxes this year. Make an agreement that you’ll receive the deduction for the next two years, instead of alternating. Or, request that your ex give you a monetary payment for the difference this year.
To avoid this situation in future years, the simplest thing you can do is have a conversation with your ex, and you might be surprised how much you can resolve. Then, put that agreement in writing.
If a civil convo won’t work, then when it’s time to file your taxes—and it’s legit your year to claim your child as your dependent—do it as soon as possible, so you’re on record with the IRS for having done so first. You can even take it a step further by adding supporting documentation to your tax filing that shows your child resides with you. While this doesn’t guarantee IRS approval, you’ve at least covered your bases.
In any case, it’s always a good rule of thumb to consult with your attorney or financial adviser in these matters.
If you need assistance with a family law matter, our attorneys at Petrelli Previtera, LLC can provide you with the professional advice you need to make an educated decision. Schedule a consultation with one of our attorneys today.