Some of the financial issues implicated by child custody arrangements and court orders are (1) child support payments; (2) payment for health insurance; and (3) the ability to claim the child or children as dependents for tax purposes. The Internal Revenue Service (IRS) rules dictate that the parent with whom the child spent the most nights during the tax year has the right to claim the child as a dependent. And if the child spends an equal number of nights with each parent during the tax year, the parent with the higher adjusted gross income (AGI) has the right to claim the child as a dependent. Sometimes the child custody court will order the parents to alternate years of claiming the child as a dependent.
In Texas, child custody arrangements and court orders often address financial responsibilities such as child support payments, healthcare costs, and tax implications. Child support is determined based on the non-custodial parent's income and the needs of the child, with guidelines set by state law. The custodial parent, or the parent with whom the child lives most of the time, typically receives child support from the non-custodial parent. Health insurance for the child is usually required to be provided by one or both parents, and the cost may be factored into the child support calculation. Regarding tax implications, the IRS rules state that the parent with whom the child spent the most nights during the tax year is generally entitled to claim the child as a dependent. If the child spends an equal number of nights with each parent, the parent with the higher AGI is entitled to the claim. However, Texas courts can order parents to alternate the years they claim the child as a dependent, which overrides the IRS rule. It's important for parents to adhere to the specific terms outlined in their custody order or agreement regarding these financial issues.
