In any divorce proceeding or a post-decree matter in Minnesota, the Court has the ability to address certain tax matters that can have financial implications on parents and families.
Tax Filing Status After a Minnesota Divorce
There are three primary tax filing statuses. The most beneficial is “Married Filing Jointly” (MFJ), which carries the highest standard deduction and most generous tax brackets.
The next most beneficial status is Head of Household (HOH)
The least beneficial tax status is “Single”, therefore, when the parties go through a divorce, and since neither of them can file as a married individual (unless they get remarried), the issue of which parent can claim Head of Household status becomes important.
Generally speaking, the head of household status is only given to the parent who spends more than 50% of time with the minor child in a calendar year. As such, the head of household status always travels with the custodial parent.
Put another way, if a parent is awarded less than 50% parenting time – let’s assume 25% parenting time – that parent cannot file as Head of Household.
Married Filing Jointly or Married Filed Separately After Divorce
In a MN divorce proceeding, the issue of how to file taxes while a divorce proceeding is pending is an important one.
First, if you are in the midst of a divorce proceeding, you should consult with your family law attorney before you file your tax returns. Second, if you’re going through a divorce proceeding, you have the option of filing married filing jointly or married filing separately.
Generally speaking, married filing jointly will generate the biggest tax advantage for the family. For this reason, many family law disputes center around one parent filing his/her tax returns as married filing separately, leaving the other parent with no other choice but to also file as married filing separately.
To be clear, this issue is a complicated one. For example, it may be perfectly appropriate to take the position that one parent should file married filing separately because the other parent is self-employed and tax liability is an issue because of failure to keep good business records. The point is that this issue should be explored with your family law attorney before filing taxes.
Who Gets The Child Care Tax Credit
Generally speaking, the parent who pays for child care for a minor child is able to claim a child care tax credit off $600 per child on his/her tax return.
This child care tax credit only goes to the parent who files as head of household, therefore, it is always a good idea to describe with particularity the parent who is going to pay directly to that childcare provider and who will also be able to claim the child care tax credit.
In some situations, a parent could have a health savings account or a family savings account which may allow the parent to claim a different amount for the child care tax credit. It is always a good idea to coordinate these tax issues with an accountant as well as your family law attorney.
Who Gets The Child Tax Credit After a Divorce?
The child tax credit results in a reduction of taxes (credit of up to $2000) for qualifying children under the age of 17. This credit gets phased out depending upon the income level of the parent.
This is another point of negotiation between parents.
Although at present, the tax dependency exemption is no longer applicable, generally speaking the tax dependency exemption travels with the person who gets the child tax credit.
Need Professional Help With Preparing For Taxation After Divorce?
Alithis Family Las can help you prepare for taxation after your divorce, guiding you through the complex decisions and issues that should be handled during proceedings.
