How To Share The Child Tax Credit After A Divorce?
The divorce process can be extremely stressful, as there are a lot of things to figure out. One of the most complex issues that may need to be addressed is tax considerations. This can be one of the most confusing since the ability to claim your child/children as dependents can affect how much in taxes you will pay, the tax credits you can claim, etc. This is something that you need to understand, including the ability to receive advanced child tax credits.
Addressing Child Tax Credits
Since tax credits for children can be a complex issue to talk about for parents who become separated or divorced, it will still need to be determined. While a couple is still legally married, they may continue to file joint tax returns and claim tax credits for their child/children.
Couples may still be able to file a joint tax return and claim tax credits for their children while they are still legally married. However, if a couple has not legally dissolved their marriage, they may file a joint tax return and claim their child tax credits. However, if a couple must separate their finances and close joint bank accounts, etc., they may need to agree on the division of any payments they receive. This can be done by filing a motion for temporary relief in divorce court. There, a spouse may request that these payments be equally divided among both parents.
Additionally, the payments are allocated to the parent with whom the children are currently living. Other cases may be even more beneficial to parents, and because of this, parents should contact the IRS and make the decision to forego advance payments for the child tax credit. You will then be able to determine how this credit will be claimed when you file your next tax return.
So many child-related tax issues can arise during divorce or separation. During the divorce process, both parents will need to make sure that their divorce settlement addresses how they will divide their child’s tax credits moving forward. In some cases, the custodial parent with whom the child primarily lives will have the right to claim tax credits for the child. Furthermore, other arrangements can be made, but it depends on the amount of parenting time a child spends with each parent, financial circumstances, and additional agreements between the parents.
Advance Tax Credits & Divorced Parents
For parents who have already gone through the divorce process, the advance tax credit can still bring up some other complications. The IRS will make payments based on the tax returns that both parents have filed in 2021 for the tax year 2020. If one of the parents claimed their child as a dependent for 2020, and the child qualifies for the child tax credit for 2021, the IRS will make payments for the advance tax credit to that parent specifically.
Categorised in: Divorce Lawyers