Divorce can be emotionally and financially overwhelming for couples. One of the significant changes that come with a divorce is losing tax credits. Dependent tax credits are usually available to parents or guardians who have children or dependents. However, in Mississippi, how dependent tax credits are calculated changes when a couple is divorced. In this article, we will explore what dependent tax credits are, how they work in Mississippi, and how to deal with changes when getting a divorce.
Understanding Dependent Tax Credits
Dependent tax credits are a type of tax break provided by the government to help parents or guardians provide for their dependents. Dependents may include children, elderly relatives, or other dependents who rely on their support. Tax credits reduce the amount of tax that individuals owe the government. The more dependents a person has, the more tax credits they receive.
How Dependent Tax Credits Work in Mississippi
Mississippi follows a formula to calculate dependent tax credits based on the number of dependents and the income of the person claiming them. Before the divorce, the custodial parent could claim all the dependents on their tax return. However, after the divorce, the formula changes.
After a divorce, Mississippi follows a model that splits the dependent tax credits between the custodial and non-custodial parent. The number of dependents each parent claims determines the proportion of the tax credit they receive.
Understanding Custodial and Non-Custodial Parents
In Mississippi, the parent that the court awards custody to is the custodial parent. The custodial parent is the parent who spends most of the time with the child and makes decisions regarding their welfare. The non-custodial parent, on the other hand, has visitation rights and pays child support to the custodial parent.
How to Deal with Changes When Getting a Divorce
Going through a divorce means that all aspects of life, including taxes, are affected. Below are steps to take when dealing with changes to dependent tax credits during a Mississippi divorce.
1. Reach a Custody Agreement
Before claiming dependent tax credits, the custody of the children must be decided upon in court. Depending on the case, the court may award sole custody to one parent or joint custody.
2. Understand the Tax Law
It is essential to understand the state’s dependent tax credit formula to know how much tax credit one is entitled to after a divorce. Seeking the services of a legal or financial expert may be helpful.
3. Record all Financial Transactions
It is essential to maintain a record of all financial transactions regarding the support of the child, including child support payments and other expenses incurred. This record may come in handy when determining who gets to claim the tax credits.
4. File the Tax Returns Correctly
If a custodial parent claims all the dependents on their tax return, this may be considered fraudulent behavior by the government. Both parents must not claim the same child as a dependent. The tax return must reflect the number of dependents each parent claimed.
5. Seek Professional Help
Getting a divorce can be complicated and emotionally draining. Talking to an attorney or a financial expert regarding tax credits can provide more insight and help ease some of the stress.
Conclusion
Getting a divorce undoubtedly comes with significant changes. Understanding the dependent tax credit formula in Mississippi can help divorced couples claim the correct amount of tax credits. Seeking legal and financial help can also aid in navigating tax and financial matters. By following the right steps, divorced couples can successfully deal with changes to dependent tax credits.