Often times, when working through a divorce or a child custody case, the parties will focus on immediate, obvious issues such as making medical decisions or sharing holidays. However, there are a number of different long-term questions that should be addressed when sorting out child custody matters. One question that is commonly neglected, is how will the parents claim a minor child on their tax returns?
Up front, it should be noted that when it comes to the tax implications of a child custody arrangement or questions about how to fill out a tax return, Huffman-Shayeb Law, PLLC always recommends that you seek the advice of a trained and knowledgeable tax professional. Huffman-Shayeb Law, PLLC can offer its clients legal advice about Arizona family law, but it cannot provide advice about tax law or federal law generally.
If you share custody over a minor child with another individual, an Arizona court order may impact your right to claim a minor child on your tax returns. When an Arizona court orders child support, which it must do when it is establishing or modifying parenting time, it must also make orders regarding how the parents will claim a minor child on tax returns. See Arizona Child Support Guidelines § XI (2022). The Arizona Child Support Guidelines state that:
When a Child Support Order is established or modified, the federal and state tax benefits related to the child tax credit(s) for the minor children are allocated between the parents by agreement or by court order.
§ XI(B)(1). The guidelines allow parents to agree on how to handle the claiming of minor children on tax returns. One common arrangement involves allowing each parent to claim a minor child every other year. Other common arrangements involve each parent claiming a different child, if there are multiple children, for each tax year or having one parent claim a minor child every year in exchange for concessions or deviations regarding the sharing of the child’s expenses.
When parents enter into these types of agreements, the non-claiming parent may need to sign off on forms that allow the other parent to claim the exemptions and/or credits on their tax returns. For example, as the Arizona Child Support Guidelines note, “[a]n Internal Revenue Service Form 8332 needs to be signed by the parent who is releasing the tax benefit by no later than January 31 of the year immediately following the tax year.” See § XI(B)(5).
If the non-claiming parent refuses to do so, the claiming parent may need to go back to family court to seek an order for additional relief or perhaps, if there is already a court order requiring compliance, a finding of contempt against the disobedient parent. In the meanwhile, noncompliance might prevent the claiming parent from claiming the tax exemptions and/or credits related to that minor child.
It is worthwhile to note that a child support order may also make the right to claim tax benefits for a minor child contingent on the obligor staying current on a child support obligation. See § XI(C)(4). On this issue, the Arizona Child Support Guidelines state:
If a parent who is required to pay monthly child support is entitled by court order to claim the tax benefit in a given tax year but has not fully paid the Child Support Obligation for that tax year, the parent entitled to receive child support may become entitled to claim the tax benefit for that tax year, and may elect to pursue those tax benefits.
Id. (emphasis added). It is important to note that the Arizona Child Support Guidelines go on to describe a recommended procedure for providing notice of a dispute concerning outstanding child support and a timeframe for seeking court intervention to resolve the dispute. See id. Regardless, however, a parent should not claim a child on their tax returns, contrary to the terms of a court order, simply because the other parent has failed to stay current on their child support. Rather, parties should carefully follow the procedures prescribed by Arizona law and their court orders, to make sure they do not inadvertently violate the directives of a court.
As the saying goes, an ounce of prevention is worth a pound of cure. Sometimes, when ordering child support, an Arizona court may neglect to enter orders regarding the how the parents should claim their minor children on tax returns. Sometimes, a court will enter such orders, but the order might be vague and confusing, or might fail to direct the non-claiming parent to cooperate in signing any necessary tax forms. Having a competent and thorough family law attorney can help cut down any future problems that might arise when you share custody for a minor child and try to claim that child on tax returns. If you are considering initiating or are involved in a court action regarding legal decision-making / legal custody, and need the guidance of an experienced and compassionate law firm, do not hesitate to contact Huffman-Shayeb Law, PLLC to set up a consultation and discuss your options.
Disclaimer: This publication is for educational and informational purposes only, and represents Huffman-Shayeb Law, PLLC’s understanding of the present state of Arizona law only. This publication does not constitute legal advice or counsel, and should not be construed as a comment on the merits of any particular case. It should be noted that the laws and requirements of the State of Arizona may change at any time and that this information may not be complete or correct.