NEW YORK (MainStreet) — Melissa Knecht believed that once her divorce was final, life would get easier. But in reality, partly because of income taxes, it’s gotten harder for Knecht, a 49-year-old who married straight out of college at 22.
“All the issues that my ex-husband and I faced during our marriage around finances and communication are not gone but instead have gotten much worse after the divorce,” Knecht says.
Seeking an amicable resolution to a three-year divorce process, the mother of four came to an agreement with her ex-husband: “He claims the children for the first five years after the divorce and then I claim them,” Knecht says. The co-parents have been divorced four years.
Some 45% to 50% of first marriages end in divorce, compared with 60% to 67% of second marriages, according to the Forest Institute of Professional Psychology.
What most parents don't know before initiating a divorce is that there is no joint legal or joint physical custody terminology on income tax returns, even though it's often what family court awards feuding spouses.
"Legally the parent with whom the child resides more than 50% of the time is the parent that can claim the child," says Sheri Atwood, founder of SupportPay, an automated child support payment platform company that enables parents to share expenses and exchange child support directly with each other.
Because Knecht and her ex-husband did not track the amount of alimony he paid and how much she needed to claim as income, the former couple's numbers didn't match.
"The first year after our divorce we got audited," Knecht says. "After that, he did both of our taxes to ensure this didn't happen again."
For tax purposes, the primary caregiver of the child is named the custodial parent who is entitled to claim the child care credit.
"The problem arises when determining who the custodial parent is and coming to an agreement with the other parent," Atwood says. "If the time is equal between parents, then the person who provides the greatest amount of financial support to the child is the custodial parent and is the one who can claim the child."
Care services eligible for credit include private home nurses, licensed dependent-care centers, nursery school and kindergarten costs and household help.
"When it comes to child support and sharing child expenses, our court order is very generic and doesn't address a lot of the conflict we faced after the divorce was final and when we no longer had the support of our lawyers to work out the details," Knecht says.
Atwood advises filing first when facing an uncooperative ex-spouse.
“The IRS has to take the first claim, and your ex will have to prove that they deserve the exemption,” Atwood said.
Filing form 8332 is another option when children spend less than six months of the year with a spouse who feels he or she should be claiming the exemption.
— Written by Juliette Fairley for MainStreet