Divorce in Minnesota: Who Gets to Claim the Child for Taxes?

Tax law is not state-specific, it's federal. The Internal Revenue Service has deemed that noncustodial parents are not able to claim their children for tax purposes. In general, since the custodial parent is caring for the child the majority of the time, they are the party that should receive the benefit. For tax purposes, a title of joint custody does not really matter. The IRS looks solely at what percentage of parenting time each parent has, and the party who has over 50% will receive the benefit.

This is true for a party’s ability to claim the child as a dependent for tax purposes and for other tax benefits such as credit for any child and dependent care expenses.

In Minnesota divorces, it is common for the parties to agree in the divorce decree to divide the right to claim the minor child for tax purposes. This is done by alternating years for the right to claim, offering a party with a higher potential tax benefit the opportunity to buy the other party out of their rights, or having each party claim one of the children (if more than one child). If this is used, the custodial parent must sign over their rights through a Release form (IRS Form 8332) and file it with the IRS.

The credit given for child care is not as negotiable. The IRS will only allow one parent to claim any deduction from child care costs, and it will only allow the parent claiming the credit to claim the amount they actually paid to the provider. For example, if mom makes all of the payments to the daycare provider but agrees to allow dad to take the credit, dad will not actually receive any benefit.

If both parents claim the same child, both of their tax returns are flagged by the IRS and the matter is investigated. The custodial parent has the ultimate right to claim the child for tax purposes, so it is important to have any other agreements included in your final divorce decree and to get any releases signed by the custodial parent. Also, it is important to talk to a tax professional about any implications from your divorce settlement on what your ultimate goals are.