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The Law Offices of Paul H. Nathan

California Child Custody, Tax Deductions, and Your Rights

There are many decisions to be made during a divorce. Who gets the children? Where will they live? How much child support will be paid? Compared to these decisions, taxes may seem like a minor matter. But, giving up your right to claim your children on your tax form could make a big difference to your family’s finances.

U.S. tax law offers certain tax breaks to taxpayers with children. These include a higher standard deduction, an exemption for each child, a child tax credit, and a deduction for child care and educational expenses. When you were married, you and your husband shared these deductions. Once you are divorced, the deductions can no longer be shared.

Although you and your ex share your child’s expenses, IRS rules allow only one parent to claim the child on their taxes. In most cases, the custodial parent gets the deduction.

There are all kinds of California child custody agreements. You may have sole physical custody, or you may share physical custody with your ex. You may have sole or joint legal custody. The IRS considers the parent with whom the child spends the most nights to be the custodial parent.

What if your California child custody order splits time equally between the parents? In this case, the parent with the highest adjusted gross income gets to claim the child.

If you are the custodial parent, you can choose to give your ex-spouse the right to claim your child or children as a dependent. In fact, when there is more than one child, divorced parents may opt to split the deductions so that everyone benefits. To do this, you must fill out IRS Form 8832. You can specify whether you are giving up the deduction for one year or multiple years. Your ex-spouse must then attach the form to his income tax return.

Some California divorce agreements require that the custodial parent give up the right to a tax exemption through Form 8832. 

What’s the right choice for you? 

Every family is different. The San Francisco child custody attorneys at The Law Offices of Paul H. Nathan can help you find the arrangement that works for you and your family. To schedule an appointment, call us at 415-341-1144.