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Tax issues for divorcing couples with children

Massachusetts residents who are going through a divorce may need to consider a number of issues regarding taxes, and one thing spouses with children need to think about is child support. According to data from the U.S. Census Bureau, $32.9 billion was owed for child support around the country in 2013, but only around 70 percent of that was received.

Child support payments are not taxable to the recipient, and the parent making payments cannot deduct them from taxable income. Furthermore, only one parent can claim a child as a dependent. The parent who gets to use the child tax exemption is usually the custodial parent that the child spends the most time with and lives with, and this applies even if the noncustodial parent pays for the majority of a child's expenses.

Parents can discuss tax credits related to children before a divorce and figure out a plan. For example, parents cannot split a tax credit for a year but could decide to alternate between who receives the credit each year. This may be easiest for parents with joint custody, but a noncustodial parent can declare a child as a dependent with the appropriate forms when the custodial parent agrees to this. If parents have multiple children, they could include in divorce documents which child each parent will claim.

Many options exist when forming a settlement agreement during a divorce, and the result typically depends on the relationship between the spouses. If parents can communicate and work together, arrangements might be more flexible and favorable to both parties while a judge may have to decide everything if a couple cannot come to a decision. A family law attorney can often assist a parent in negotiating a comprehensive agreement.

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