It’s tax season-the dreaded time of the year when Americans spend hours sorting crinkled receipts, downloading pages of tax form instructions, reviewing bank statements and desperately searching for W-2s, 1099s or other tax documents to complete our returns.
During a divorce, the federal tax dependency exemption is not often at the top of the separation discussion list. Most parties, rightly so, concern themselves with children and custody, home sales and equity, retirement and bank account division and claiming the family pets. But, one important point of domestic law practice is the federal tax dependency exemption.
Taxation, in general, is considered by the Georgia Courts to be governed by federal law. The Sixteenth Amendment to the United States Constitution provides that only Congress has the power to impose a tax on income. According to Federal Law I.R.C. § 152(e)(4)(A), the “custodial parent” with earned income will receive the tax exemption. Custodial parent is defined as the parent with the most parenting time per calendar year.
Federal law does allow for the custodial parent to voluntarily waive the benefit and release the exemption to the non-custodial parent. This waiver is solely at the discretion of the custodial parent and not subject to court order. However, a non-custodial parent may be able to use the federal tax dependency exemption to lower child support obligations.
More recently, the federal tax dependency exemption has been further analyzed. The emerging trend of co-parenting and 50/50 schedules challenge the traditional custodial vs. non-custodial parent status. In 2006, the Georgia Supreme Court decided that the federal tax dependency exemption MAY be divided between the parents when parenting time is, so far as is practicable, equal.
The Snyder Adams Law Firm, LLC encourages everyone going through a divorce to consult a qualified accountant, tax preparer, etc. prior to the final settlement agreement. And, the Snyder Adams Law Firm, LLC expressly states that we are not qualified accountants, tax preparers, etc. But, it is imperative that your divorce/child custody attorney is familiar with the rules and benefits of the law as it pertains to child income tax credit. Call us today for a free telephone consultation.