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At Mattox Wilson, we regularly field questions from divorcing parents about claiming children on tax returns. These questions often arise late in the divorce process or, worse, after the divorce is final and tax season approaches. What seems like a simple matter of who gets a tax deduction actually involves federal tax law, state law, and the specific terms of divorce decrees working together in ways that can significantly impact finances.
Understanding how child tax claims work after divorce helps parents avoid conflicts with former spouses, issues with the IRS, and lost financial benefits. We have seen parents lose thousands of dollars in tax benefits because agreements were poorly drafted or because they did not understand the rules governing dependency exemptions.
Don’t let this happen to you. Call our office at 812-944-8005 to schedule a confidential consultation with an experienced custody attorney to learn more about your legal rights and options.
Under federal tax law, the custodial parent generally has the right to claim the child as a dependent. The IRS defines the custodial parent as the parent with whom the child lived for the greater number of nights during the tax year.[1]
This rule applies regardless of which parent pays more child support or has a higher income. If a child spent 200 nights with one parent and 165 nights with the other parent, the first parent is the custodial parent for tax purposes, even if the other parent earns significantly more money.
However, the custodial parent can release the right to claim the child to the noncustodial parent. This release must follow specific IRS requirements, which we will discuss in detail below. Indiana divorce courts also have authority to allocate the dependency exemption as part of the divorce decree, but such allocations must still comply with federal tax requirements to be effective.
In our practice, we ensure that divorce agreements clearly specify who claims the child each year, how this might alternate between parents, and what conditions apply. Ambiguous language in divorce decrees can lead to disputes every tax season, and the IRS will not resolve disagreements between parents. Further, the IRS no longer accepts copies of a divorce decree to show who has the right to claim a child as a dependent.[2] They simply follow their rules, which may not align with what parents thought their divorce agreement said.
Individuals negotiating divorce settlements should contact Mattox Wilson to ensure tax dependency provisions are properly drafted to protect financial interests.
When parents share custody relatively equally, determining who qualifies as the custodial parent requires careful counting of overnight stays. The IRS counts the number of nights the child slept at each parent’s home during the tax year.
If the child spent exactly the same number of nights with each parent (182 nights each in a non-leap year, for example), the IRS awards the dependency exemption to the parent with the higher adjusted gross income. This tiebreaker rule applies automatically if both parents attempt to claim the child.
However, we recommend that parents with shared custody arrangements address this issue directly in their divorce settlement or parenting plan rather than leaving it to the IRS tiebreaker rule. Options we typically negotiate include:
The key is creating a clear, specific agreement that leaves no room for confusion when the tax submission deadline approaches.
Yes, the noncustodial parent can claim the child, but only if the custodial parent properly releases the claim using IRS Form 8332 (Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent).
This form allows the custodial parent to release the right to claim the child as a dependent for one year, multiple years, or all future years. The noncustodial parent must attach this signed form to their tax return to claim the dependency exemption and the child tax credit.
There are instances where custodial parents may refuse to sign Form 8332 despite court orders requiring them to do so. While divorce courts can hold someone in contempt for violating such orders, if one parent contests the exemption, the IRS will not allow the noncustodial parent to claim the child without the proper form. This creates a situation where a parent might have a court order in their favor but still cannot claim the tax benefit.
Before agreeing to any arrangement where one parent relies on a former spouse signing Form 8332, individuals should speak with us about enforcement mechanisms and alternative structures that protect interests. In cases where an exemption is not challenged, Form 8832 is typically not an issue. In the vast majority of cases, the form is never filed because the other party does not object to the parent claiming the child.
The dependency exemption is just one of several tax benefits related to children. Understanding how each benefit works and which parent can claim each benefit is crucial to maximizing tax advantages.
The Child Tax Credit is a dollar-for-dollar reduction in tax liability, currently up to $2,000 per qualifying child. This credit can be claimed by the parent who claims the child as a dependent. If the custodial parent releases the dependency exemption to the noncustodial parent using Form 8332, the Child Tax Credit follows the dependency exemption to the noncustodial parent.
However, other tax benefits do not automatically transfer with the dependency exemption:
In our experience, many parents and even some attorneys overlook these distinctions. A custodial parent might release the dependency exemption thinking they are giving up all tax benefits, when in fact they retain valuable credits and filing status advantages. Similarly, noncustodial parents sometimes believe claiming the dependency exemption gives them all child-related tax benefits, only to discover the EITC and other credits remain with the other parent.
A well-drafted divorce decree includes specific, enforceable provisions about tax dependency claims that minimize future disputes and maximize benefits for families, including:
Parents should not leave tax dependency claims to chance or last-minute negotiations. Contact Mattox Wilson to ensure divorce decrees include comprehensive, enforceable tax provisions.
Yes, parents can agree to modify who claims the child on taxes after the divorce is final, but such modifications should be formalized properly to avoid disputes.
If both parents agree to change the arrangement, several options exist:
In our practice, we generally recommend formalizing any significant changes through a modification of the decree, especially if the change will be permanent or long-term. The modest cost of filing a modification petition is worthwhile compared to the potential disputes and lost tax benefits that can result from informal arrangements.
If parents cannot agree on a modification, the parent seeking the change must file a petition showing that circumstances have substantially changed since the original decree. Examples of substantial changes might include:
Courts have discretion in deciding whether to modify tax dependency provisions and will consider what serves the children’s best interests, not just what benefits one parent financially.
If both parents claim the same child on their tax returns in the same year, the IRS will apply its tiebreaker rules to determine who has the legal right to claim the child.
The IRS will typically send letters to both parents indicating that there is a problem with the return. The IRS will then determine who should have claimed the child based on its rules (custodial parent, unless Form 8332 was properly executed). The parent who incorrectly claimed the child will have their return adjusted, may owe additional taxes, and could face penalties and interest.
If a former spouse wrongfully claims a child on their taxes:
Parents should not try to negotiate directly with the IRS. The IRS does not mediate disputes between parents. They simply apply their rules and adjust returns accordingly.
Remarriage adds complexity to tax dependency claims because a new spouse’s income may affect tax situations, but the rules for claiming children from a previous relationship remain the same.
If a custodial parent remarries, they can still claim their child from the previous relationship. A new spouse’s income does not affect status as the custodial parent. If the custodial parent files jointly with the new spouse, the tax benefits from claiming the child will benefit that household (including the new spouse).
If a noncustodial parent entitled to claim the child remarries, they can still claim the child if they have a proper Form 8332. A new spouse’s income combined with the noncustodial parent’s income may make the dependency exemption and Child Tax Credit more valuable.
Tax considerations should be front and center during divorce settlement negotiations, not an afterthought. The difference between a well-planned tax strategy and a poorly considered one can mean thousands of dollars per year.
When we represent clients in divorce negotiations at Mattox Wilson, we address:
Parents sometimes focus entirely on immediate concerns like custody schedules and property division, treating tax issues as minor details to resolve later. This approach costs money. Tax benefits are valuable financial assets that should be allocated thoughtfully during divorce negotiations.
Individuals going through divorce should meet with Mattox Wilson early in the process to ensure tax considerations are properly addressed in settlement negotiations. Call us today to schedule a consultation.
When a former spouse refuses to comply with tax provisions in a divorce decree, several enforcement options exist through family court, including:
It is important to understand that family court enforcement remedies do not change what happens with the IRS. If a former spouse wrongfully claimed the child and the IRS has already processed their return, the IRS will not reverse that based on a family court order. However, family court enforcement can provide financial compensation and deter future violations.
Proper documentation protects the right to claim children and provides evidence if disputes arise. We advise clients to maintain:
Organized records make tax filing easier, support positions if disputes arise, and demonstrate to courts that parents have been responsible and compliant with decrees.
Tax dependency claims represent significant financial value that should be carefully addressed in every divorce involving children. At Mattox Wilson, we have seen parents lose thousands of dollars in tax benefits due to poorly drafted agreements, lack of understanding about IRS rules, or failure to enforce existing provisions.
The interaction between federal tax law, Indiana family law, and the specific terms of divorce decrees creates a complex framework that requires careful navigation. What seems simple (“the custodial parent claims the child”) often involves nuances that affect multiple tax benefits differently.
If parents are currently negotiating divorce, enforcing existing tax provisions, or considering modification of decrees, our dedicated custody attorneys can help them understand options and protect financial interests.
Contact Mattox Wilson today at 812-944-8005 to discuss tax dependency claims in divorce cases. We provide clear guidance on complex tax issues and ensure divorce agreements protect rights and maximize available benefits for families.
[1] Claiming a child as a dependent when parents are divorced, separated or live apart, IRS (last visited Feb. 10, 2026), Claiming a child as a dependent when parents are divorced, separated or live apart | Internal Revenue Service.
[2] Divorce and separated parents, IRS (last visited Feb. 10, 2026), Divorced and separated parents | Internal Revenue Service.