A divorce can have dramatic emotional effects, but it can also have financial effects. You and your former spouse must consider separate living expenses, alimony and child support payments. Divorce can also affect your taxes, particularly if you have children. If you and your former spouse have joint custody of your daughter, whether you can claim your daughter as a dependent depends primarily on the details of your divorce agreement.
Distribution of Custody
Even if you and your spouse have joint custody of your daughter, one of you may keep your daughter a larger percentage of the year. If your daughter lives with you a larger portion of the year, you can typically claim your daughter as a dependent to reduce your tax liabilities. Conversely, if your daughter lives with your former spouse a larger part of the year, you usually cannot claim your daughter as a dependent.
Alternate Year Deductions
The divorce judge may impose an alternate year exemption arrangement to address joint custody, particularly if your daughter spends equal time with you and your former spouse. In this case you will claim your daughter as a dependent one year, and your spouse will claim her the following year. This prevents one spouse from enjoying greater tax benefits from a joint custody arrangement than the other spouse.
Release to Claim of Exemption
Internal Revenue Service (IRS) Form 8832, Release of Claim to Exemption for Child of Divorced or Separated Parents, is typically used to allow a noncustodial parent to claim an exemption of a child to reduce her tax liability. However, your spouse may sign this form to allow you to claim an exemption for your daughter in a joint custody agreement. If you claim an exemption using Form 8832, you will need to attach a copy of the form with your tax return.
Considerations
The divorce judge may consider several factors when determining whether to allow you to claim your daughter as a dependent for tax purposes. These factors may include the tax consequences incurred by both you and your former spouse, which of you pays child support and the income earned by you and your former spouse.
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