How Child Custody Affects Tax Credits in Orlando

When most parents pursue child custody, they think only about one thing: Spending more time with their kids. However, parents might also want to consider more complex consequences of child custody – including tax implications. The outcome of your child time sharing agreement in Orlando could affect your tax credits, and parents should be aware of these factors as they approach negotiations or trials.

Understanding Child Tax Credits in Florida 

In Florida, parents can pursue tax credits for their dependent children. The American Rescue Plan expanded these tax credits, and it is now possible to receive credits worth over $3,000 for each dependent child in the family. Children under the age of six may trigger higher tax credits, allowing Florida parents to keep more of their post-tax income. For parents with disabled or incapacitated children, these tax credits may be particularly important – and they may continue for the foreseeable future.

Who Gets the Tax Credits After a Divorce or Breakup? 

When parents split up or divorce in Florida, they may need to decide who should continue to claim these tax credits. The IRS clearly states that only one parent may claim these child tax credits each year, and this could be a potential source of dispute during divorce.

If parents cannot resolve this issue on their own, the IRS will take matters into their own hands and decide for themselves which parent should enjoy the credits. Generally speaking, the parent with primary custody of the child receives the tax credits. If both parents attempt to claim the same child as a dependent on their tax return, the IRS will likely investigate the situation and determine which parent has primary custody.

However, this can cause significant and needless delays when filing tax returns. It makes more sense for parents to handle this issue among themselves, and they can do this during alternative dispute resolution (ADR). For example, both parents might discuss the issue and negotiate some kind of deal. One parent might take the child tax credits while the other receives something else of equal value.

However, these agreements are only really necessary when the child spends almost exactly the same amount of time with each parent. In this situation, it might be difficult for parents to clearly identify the “primary custodial guardian,” as each parent may spend roughly 50% of the year with the child.

In all other situations, the parent who spends more time with the child should get the tax credits. This is due to the IRS “residency test.” Note that if a parent wishes to claim these tax credits, they must spend more than 50% of the year with the child. Even if both parents agree to alternate claiming the credits each year, they must also alternate their schedules to ensure the dependent child always spends more time per year with the parent who claims the credits.

Can a Child Time Sharing Lawyer in Orlando Help Me Get Custody? 

An experienced child time sharing lawyer in Orlando may be able to help you achieve positive outcomes during your custody battle. While many parents are unaware of the potential tax implications, this is definitely something to keep in mind during negotiations or court proceedings. To learn more about the subtle consequences of custody agreements, contact Steve Marsee, P.A. today.

Sources: 

whitehouse.gov/wp-content/uploads/2022/03/Florida-Tax-Credit-1-pager-3.8.pdf

cnbc.com/2025/01/16/child-tax-credit-could-change-2025.html