Who gets to claim dependents on their taxes can make a big difference after a divorce in Illinois. The person who claims dependents may also get to claim Head of Household status. Dependent status also impacts who gets the advantages of the Child and Dependent Care Tax Credit, the Earned Income Tax Credit and the Child Tax Credit. Often, the terms of the divorce agreement will set out who has the right to claim dependents, but where that is not the case, the IRS has rules that it will apply.
In cases where a non-parent and a parent both try to claim a person as a dependent, the IRS will generally side with the parent and reject the non-parent's claim. Where two parents each attempt to claim a child dependent, the IRS will usually grant the claim of the parent with whom the child lived for more time during the relevant year. When the residency factor does not answer the question for the IRS, the IRS will look to income, and the parent with the higher adjusted gross income can typically claim the dependent.
The IRS will not answer any disputes of this sort before they arise. Rather, the person who files their tax return first receives the credit. The person who files second will find their claim initially rejected. Divorced parents should try to work together to avoid tax filing problems. The custodial parent can relinquish the right to claim a dependent and give it to the non-custodial parent by filing Form 8332 with the IRS.
People who are going through divorce in Illinois have a lot of stress and worry on top of their normal tax filings. An attorney with experience practicing family law might be able to assist interested parties by anticipating financial changes that may arise after divorce. If it is early in the case, an attorney may be able to help by drafting and filing a petition for divorce.