If you are divorced and have children, you should know about recent changes to tax laws, and how these could affect your finances going forward.
In 2018, the federal Tax Cuts and Jobs Act made two significant changes to the child tax credit and the dependency exemption. The new law:
Before 2018, the custodial parent received the Dependency Exemption automatically–unless they chose to transfer the exemption to their former spouse using IRS Form 8332, “Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.” This often made good financial sense if the custodial parent had little or no taxable income to which the deduction could be applied, and the non-custodial parent could use it to pay less in taxes.
Instead, a custodial parent is now eligible to claim an expanded and refundable Child Tax Credit–unless they previously signed over their Dependency Exemption. If they did, the non-custodial parent will receive the Child Tax Credit.
If you want to receive the Child Tax Credit as the custodial parent, but had in the past transferred the dependency exemption to your ex, you will need to:
Be aware, however, that the revocation will not take effect until the tax year after you notify your non-custodial ex-spouse. Notice given to your former spouse before the 2020 tax deadline will not impact your 2019 federal return; you must wait until next year to apply it to your 2020 tax return. Visit the IRS website to learn more about the Child Tax Credit.
With a combined 30 years in family law, the attorneys at Jones Family Law Group, LLC, will provide the legal guidance you need. Contact Jones Family Law Group, LLC today for any questions or to set up a consultation.
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