When a couple splits up and they have children, they could be facing an entirely new and confusing set of circumstances, especially regarding filing their taxes. The first consideration should be which of the two parents can claim head of household status. For the 2014 tax year, anyone who is earning half or more of the income to the household, was unmarried as of the last day of the year, and had their children living with him or her for at least six months of the year, can file as head of household. Filing head of household can offer higher deductions and a lower tax rate to the parent who qualifies.
The next step is establishing whom parents can claim as their dependent. Dependent claiming cannot be split up for each individual child, but parents can agree to alternate years for claiming him or her. Generally, all of this is outlined in a divorce agreement. According to the IRS, a child is a dependent if he or she lived with the claiming parent for more than six months and if the parent supported the child during that time.
Some of the benefits of filing head of household with dependents include a $3,950 per child exemption that can be deducted for 2014. In addition, a single parent who makes $75,000 or less is allowed a $1,000 deduction per each dependent child under 16 by Dec. 31. In addition, an income-earning or full-time student head of household can take a deduction of as much as $3,000 for one or $6,000 for two children for qualified types of child care.
Being a parent can be a challenge following a divorce, and tax incidence could become a battleground for former couples. However, a family law attorney could help by advising a parent of their rights and negotiating in their favor when meeting with the other party.