Who Has The Right to Claim the Children for Tax Deduction Purposes? - Charlotte NC Family Law & Divorce Blog | Hatcher Law Group

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Who Has The Right to Claim the Children for Tax Deduction Purposes?

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Who Has The Right to Claim the Children for Tax Deduction Purposes?

J. Gregory Hatcher | Charlotte, N.C. Managing Partner & Board Certified Specialist in Family Law 

Adjustments to employees withholding often takes place in the beginning of each New Year. Parents going through separation and divorce sometimes struggle with who is entitled to claim their children for deduction purposes. Sometimes claiming a child or children has significant impact on a parents income while other times because of income disparity there is very little impact at all. A private settlement out of court gives the parties power to designate who will be claiming the children for deduction purposes. Likewise, a court can make that same determination in its orders.

The internal revenue service provides some guidance in this topic that typically allows parents to resolve the matter themselves. If there is an agreement, the internal revenue code has shown variable interest in investigating it further. However, if both parties claim the same children there can be a dispute which leads to an audit and tax implications. In situations where both parties claim the children and there is no binding order or written agreement by the parties, internal revenue code looks to the custodial arrangements of the parties. Typically, the internal revenue code will side with the party that has primary custody of the children. Primary custody is interpreted in different ways but a general understanding is that the children reside primarily with the parent that is claiming the deduction.

When making arguments about claiming deductions, another point to consider is that North Carolina Child Support Guidelines presume that the party receiving the support also claims the children. This presumption is why some deem the amount designated for child support to be substantially insufficient. For more information, reach out to your accountant or contact us.

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