If you've just separated from a spouse, the legal ramifications of your divorce are likely overwhelming, especially if you have kids. For instance, you've probably started to wonder about claiming your kid on 2019 taxes with joint custody since you and your former spouse are no longer seen as one in the eyes of the law. The answer is a little complicated, so buckle up.
The first thing to note is that only one parent or caregiver can claim a child on their taxes, as Go Banking Rates explains. This is the case with married or non-married parents or caregivers, but if you're married, it doesn't matter so much that only one of you claims your kid because you'd both reap the financial benefits no matter who puts their name down on a form. But once you cut ties with your ex's bank account, it'll probably matter to you who's getting those parent-related funds back. As Andrew Siegel, CPA explains, "dependency exemption for a child who is the subject of joint custody is claimed on the return that is designated by the joint custody (or other) agreement." So in short, you and your ex will probably have it determined in writing who gets to claim the child, though that need not be the same person every year. "This can be the same parent every year, alternating years or any other agreement reached," Siegel explains.
But if you don't have a preexisting tax agreement, you might be in a pickle. If your divorce agreement isn't split 50/50, the primary parent would claim the child, and as the IRS explains, "custody is determined by the number of nights the child slept in the home of the parent or the parent had responsibility for the child for the night." But if your little one spends equal time with each of you and you don't have a previous agreement, the general custody definition doesn't apply, which is where the tax "tiebreaker rules" come in. The tiebreakers are the criteria that determine which parent can claim if you have joint custody, and essentially, it comes down to who makes the most money.
As the Balance explains, the parent who has the higher adjusted gross income (AGI) gets to claim their child on their tax return, which means that parent has the right to the Child Tax Credit and the Child and Dependent Care Tax Credit, as Smart Asset explains. It used to apply to personal tax exemptions as well, but as Bustle reports, the Republican tax overhaul from 2017 abolished the personal tax exemption, which leads to families with more than two kids getting less money from their tax returns now than they did two years ago. The higher income stipulation regarding joint custody is in line with the conservative tax policies that generally benefit the wealthier, but theoretically, the tiebreaker would lead to more money available for childcare overall since the parent with a higher income would get a larger return.
All that being said, it's important to note that the tiebreaker only applies if you have no other written agreement with your ex regarding taxes. You can also waive your right to the claim if you think it would be better for the other parent to do so. It's really up to you and your coparent on how you want to handle things.
No matter how you and your ex end up splitting things though, it's important that you know who is claiming whom before taxes are due, because things get really messy if you both claim the same child. As eFile reports, the IRS will reject your taxes if two people claim one child, and then you'll have to let the government know what's going on, refile for the year, and then wait for them to decide who had the right to claim. The process can take up to twelve weeks, and no one wants to wait that delay on their tax return, right? Publication 596 from the IRS can help you figure out who gets to claim if you're still confused, guiding you through each requirement step by step. And, moral of the story: If you ain't talkin' money, I don't wanna talk.