When parents in the DFW Metro divorce, taxes are often not the most important part of their divorce. However, who gets to claim the children at tax time should be part of every child custody agreement. The parent who does not have primary physical custody of the children might negotiate the ability to claim the children on his or her taxes in certain years.
However, some tax benefits are exclusive to a custodial parent who otherwise qualifies for them. Single parents can file as head of household, which offers a larger standard deduction and breaks on the tax brackets. There is also the earned income tax credit, which offers the custodial parent several thousands of dollars in tax credit even though it is reduces as income rises.
The child care tax credit is also available to the custodial parent. Speaking of child care, up to $5,000 can be put into a flexible spending account through an employer for children -- tax free. These and other tax benefits can help a single parent when taxes are due. A number of tax issues pertain to couples who are divorced or separated, and a thorough review of them by both parents should be conducted.
Of course, most DFW Metro parents do not make their child custody arrangements based on the tax benefits they could receive, and the courts do not either. However, having an understanding of how each parent's taxes will be affected after the divorce could help during settlement negotiations. In the end, what is in the best interests of the children will most likely be most parents' primary concern.
Source: MarketWatch, "After the divorce: Which parent gets child-related tax breaks?", Bill Bischoff, May 13, 2016