When you make the decision to end your marriage, you know that many aspects of your financial life are about to change. This is true regarding where you will live, whether you will pay spousal support or receive it, child support and much more. You will likely have to adjust to new circumstances and make changes in how you spend, at least on a temporary basis. However, it is also important to consider how your divorce could also impact your taxes.
One of the biggest and most significant tax deductions available to parents is for their children. Now that you are moving forward with divorce, which parent will be able to claim the child on his or her taxes? It is important to know pertinent tax laws and their potential impact on their lives so that you can make the best possible decisions during your divorce and ensure that you do not find yourself in unnecessary disputes with the other spouse.
Custody and other issues that may affect taxes
The primary issues that can impact which parent may claim the child on his or her taxes is which parent has custody. If one parent retains sole physical custody or primary physical custody, meaning that he or she has the child most or all of the time, that parent has the right to claim the child on taxes. The custodial parent may have access to tax credits, earned income credit and more. Who can claim the dependent can be a more complicated matter when parents share joint custody.
In cases involving joint custody, Nebraska parents should address this matter in their divorce agreement as only one of them can claim the dependent. As it is possible to transfer the right to claim the child, some parents find it best to simply alternate years that they claim the child. It is possible to include terms that address this issue in the terms of a divorce agreement.
Help with complex issues
Tax matters are complex, but you do not have to navigate them alone. You may benefit from having professional guidance from someone who can help you make the best possible legal and financial decisions during your divorce. An assessment of your custody options and other factors may help you understand what you can expect from your post-divorce taxes.