Who Claims the Kids on Taxes After Divorce in Illinois?
Divorce brings a wave of changes. One of these is figuring out your taxes as a newly single individual. This can be one of the more complex adjustments. One of the most common questions I hear from clients is, “Who claims the kids on their taxes after divorce?” Let’s break down the rules and considerations for claiming children as dependents on your Illinois tax return.
Understanding Dependency Exemptions in Illinois
First, it’s important to remember that Illinois law avoids the terms “custody” and “custodial parent.” Instead, we focus on the allocation of parenting time and parental responsibilities.
When it comes to taxes, the parent with whom the child lives for the majority of the year is generally the one who can claim the child as a dependent on their tax return. This is often the parent who has been allocated the majority of parenting time and is providing most of the child’s daily care and financial support.
The Law: 750 ILCS 5/505(A)(3)(c)(I)
Illinois law specifically addresses dependency exemptions for children of divorced parents. Here’s what the law states: “Unless a court has determined otherwise or the parties otherwise agree, the party with the majority of parenting time shall be deemed entitled to claim the dependency exemption for the parties’ minor child.”
This means that unless you and your ex-spouse have a written agreement stating otherwise, or a judge has ordered a different arrangement, the parent with the majority of parenting time is the one who gets to claim the child on their taxes. In this instance, just like with child support, time is counted by overnights.
Exceptions and Special Circumstances
While the law generally favors the parent with the majority of parenting time, there are some important exceptions and special circumstances to be aware of:
Shared Parenting Time: If the parents share parenting time equally (meaning the child spends approximately the same amount of time with each parent), the IRS typically allows the parent with the higher adjusted gross income (AGI) to claim the child as a dependent. This can be a significant factor in determining who benefits most from the tax advantages associated with claiming a child.
Written Agreements: Even if one parent has the majority of parenting time, parents can create a written agreement that allows the other parent to claim the child as a dependent. This agreement must be filed with the IRS using Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent. This can be a helpful tool for families who want to divide tax benefits strategically or ensure both parents feel they are contributing financially.
Support Considerations: In some cases, the parent with less parenting time might be able to claim the child as a dependent if they can prove they provided more than half of the child’s financial support during the year. This might include expenses like housing, food, clothing, education, medical care, and other necessities.
Court Order: Just like with any other aspect concerning your children, the Court can enter an Order deciding who claims the kids on their taxes.
Making the Best Decision for Your Family
Deciding who claims the child on taxes can have significant financial implications for both parents. It’s essential to consider various factors to determine the best approach for your family:
Each Parent’s Income: The parent with the higher income might benefit more from claiming the child due to tax deductions and credits, such as the Child Tax Credit or the Credit for Other Dependents. Alternatively, the parent with the lower income might qualify for the Earned Income Tax Credit/
Child Support: Claiming a child as a dependent affects child support calculations. This is because the child support calculator presumes that the parent with more overnights claims the kids on their taxes.
Overall Financial Situation: Consider each parent’s overall financial situation, including expenses, debts, and other financial obligations, to determine who would benefit most from the tax advantages associated with claiming the child as a dependent.
Need Help so you Know Who Claims the Kids Next Year?
Navigating tax rules after divorce can be complicated. Since I am not a licensed tax attorney I cannot give tax advice, just apply the law. But, as a part of the parenting plans I drafts for my clients, I ensure that I answer the question of who claims the kids on their taxes. This is required so that parents know if they are or are not claiming their child or children. If you are ready to move forward with your divorce or parenting plan, feel free to reach out to my office. I am a call or click away.
Disclaimer: This blog post is for informational purposes only and does not constitute legal or tax advice. If you need legal advice, you should hire an attorney licensed in your jurisdiction. If you need tax advice, you should hire a tax advisor.