Figuring out your taxes is generally not a fun task. Throw in court order and final judgement from divorce or paternity cases in the mix and it can be a bit trickier to tell what needs to be filed. One issue that arises during divorces and paternity cases is the child care tax credit. Whether you are preparing to file your taxes or have already filed here are some important things to know.
The statute concerning how child support is calculated includes a provision for tax claims. The Florida Statues specifically state what the courts may consider and what must be included in a final order:
The impact of the Internal Revenue Service Child & Dependent Care Tax Credit, Earned Income Tax Credit, and dependency exemption and waiver of that exemption. The court may order a parent to execute a waiver of the Internal Revenue Service dependency exemption if the paying parent is current in support payments.
§ 61.30, Fla. Stat.
When deciding who can claim the child(ren) the judge or magistrate can consider the financial impact of claiming the child(ren). If one parent would benefit more from claiming the child(ren) the court is inclined to grant it to them. The court is aiming to maximize the amount of income available to benefit the children. The changes to the tax code, which we will discuss below, will impact who will benefit from claiming the children.
When the statute refers to the court, “ordering a parent to execute a waiver” it is referring to language that should be included in the final judgement or final order. The section awarding child support indicates which parent is entitled to claim the children for tax purposes. The final judgment may say that each parent may claim in alternate years. In the years where you are not claiming you should fill out IRS form 8332 ” Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent”. You can find a copy of the form here.
Tax Changes for 2018 through 2025 filings
We discussed the impact of the Tax Cuts and Jobs Act of 2017 a few months ago, you can find that here. The TCJA takes away personal exemptions through 2025. Though the exemption is not available you can request the child tax credit. The tax credit has been increased to attempt to offset the loss of the exemption. File the release form to ensure you can claim the credit in years in which your are entitled to it.
If you have not filed for a dissolution and are filing as married filing separately this year you should discuss who will claim the child(ren) on their taxes. Generally, the parent who should claim is the parent who provides over half of the support. If support is evenly provided the parent who has more overnights with the child(ren) should claim.
Finally, if you have a final judgment review these provisions. If you do not feel it maximizes the tax benefits available discuss this with the other parent and/or your attorney.