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Family law tax basics; claims children on taxes

In the course of a divorce, a legal separation or another family law matter, it is quite easy to forget about the possible tax consequences of one's decisions. While easy to forget, how one's taxes will shake out after a family law matter can be the difference of hundreds if not thousands of dollars each year.

It is therefore important, even in relatively simple matters where neither party has a lot of assets, for people to take tax-related issues seriously. One example of a tax issue that can affect any Riverside, California, couple who has children is the question of which parent claims the children on their taxes.

At least for federal income tax purposes, and from the perspective of the Internal Revenue Service, or IRS, the parent who has the children in his or her home most of the time is the custodial parent and is thus entitled to claim important dependency exemptions and other tax credits.

The iRS does not have to honor an informal agreement between the parents and, for that matter, does not have to make itself the interpreter of a family law court's orders. However, the IRS will acknowledge a written statement, in a form approved by the IRS, signed by the custodial parent and submitted to the IRS by the parent seeking to claim the tax benefits. This statement will allow the custodial parent to surrender his or her right to exemption so the other parent can claim it.

Even though what the local courts says in its order does not matter to the IRS per se, the local court can require one parent to sign over his or her exemptions to the other parent as part of the process of figuring child support or even divvying property according to California law. However, it is important that parents remember that this is a consideration that they must take in to account.

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