Which Parent Takes The Tax Exemption?
The IRS dependency exemption for children bestows a significant tax break, especially for earners in higher tax brackets. When a married couple divorces, they can’t both claim the child as a dependency exemption, nor can they split it. Because only one spouse can claim the exemption, it essentially becomes an asset for purposes of divorce, custody, child support, and spousal support.
There are many ways to assign the exemption so it is fair and beneficial for both parents. A skilled attorney can run the numbers, suggest solutions, and address the dependency exemption in the broader context of property division and financial support.
Schoenberg Family Law Group, P.C., can knowledgeably address the allocation of the dependency exemption and other tax considerations in divorce. Our San Francisco attorneys practice exclusively in California family law, serving clients throughout the Bay Area.
“In my experience, Debra and all of the staff at the Schoenberg Family Law Group have been unfailingly professional, courteous, supportive and kind as they worked with me through a painful and complicated divorce.”
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The IRS Dependency Exemption
Under the federal tax code, parents can take an exemption for each minor child in their household. After divorcing, either parent (but only one parent) is eligible to claim the exemption.
- By default, the IRS assigns the child tax exemption (dependency exemption) to the custodial parent, but parents can elect otherwise by agreement.
- Parents whose incomes are roughly equal might decide to alternate years.
- A non-custodial parent with a substantially higher income should receive a greater tax benefit from the exemption. If the other parent in a lower bracket would receive scant or no tax break, it may be a win-win for the high earner to “buy” the exemption.
Experienced Analysis And Negotiation
As experienced family law attorneys, we can assist you in determining the value of the exemption to you and help assess whether you should claim the exemption, alternate taking the exemption, or trade it for an equivalent consideration. To explore the options for allocating the dependency exemption for children — and other facets of divorce and custody —
contact us online or call 415.834.1120 to schedule a consultation.