Claiming Children on Your Taxes

I’m often puzzled by how much time clients spend fighting over which spouse gets to claim the children on their post-divorce taxes.  While a Separation Agreement should not specify who files as Head of Household, a Separation Agreement may specify who claims the children as dependents.  Many clients seem to believe that claiming a child will reap them significant financial award.  While clients may be correct that claiming a child impacts tax credits, claiming a child may not provide quite the financial windfall the client is anticipating.  Accordingly, I advise my clients to contact their CPA before negotiations to determine how much money claiming a dependent really awards them.  Clients might be surprised to learn that it’s less than a $1,000.00.  In light of that number, it doesn’t make sense to argue for hours over it in an expensive mediation.

I also advise my clients to think creatively about solutions.  If there are two children, perhaps each parent will claim one child.  Or, if there is only one child, perhaps one parent can claim on even years and the other parent can claim on odd years.

As I’ve stated previously on this blog, it’s crucial to enter negotiations informed and prepared.  Prepare yourself on this topic by asking your CPA for the true value of claiming your child(ren).  You might be surprised by his or her answer.   And, if you don’t have a personal accountant, now is the time to secure someone.  Look for someone like Susan Miller at Aurora Financial Advisors or Marc Bello at Edelstein and Company, both of whom are experienced in divorce finances.