Many Connecticut couples going through a divorce do not understand how the decisions being made currently may affect them in the future. Child custody is one of the most contentious aspects of family law, as parents struggle to gain equal custody or fair child support payments. However, child custody is important for another reason—only one parent can claim child-related tax breaks.
Generally, only the custodial parent can claim child-related tax parents. The custodial parent is the one who has custody of the child for most of the year. However, it is possible that if the divorce was amicable enough and the parents have a good relationship, the custodial parent might be able to release the right to claim these breaks to the noncustodial parent. Basically, the noncustodial parent is allowed to claim the child as a dependent.
However, before this can happen, certain legal requirements must be met. Firstly, one or both of the parents must provide child support. Secondly, parents must either be divorced by the end of the year or have lived apart during the last six months of the year. thirdly, custody must be with one or both of the parents for more than half the year. Lastly, a written declaration must be signed releasing the right to claim the child as a dependent.
These tax breaks can include generous tax credits for kids under the age of 17, higher education tax credits and student loan interest deduction. There are also other tax breaks available to both custodial and noncustodial parents and can seem overwhelming, especially with one just coming to terms with the end of the marriage. However, finances are often strained right after a divorce is finalized, as the same income is divided between two households now. Understanding the way family law issues can affect one’s financial well-being in the long run is very important and can be discussed with one’s attorney.