Shared custody, unemployment, and US taxes
July 16, 2021 1:35 PM   Subscribe

I've got a few related tax questions, and I'm not sure where to go to the get the answers. This relates to sharing custody of my kid and who claims him as a dependent, and also figuring out what my actual 2020 tax return looks like. If I need to talk to a tax accountant, that's fine, and I'd welcome tips on finding a good one, but perhaps you all can shed some light in the meantime.

My ex-husband and I share custody/parenting time of one of our kids, and the way we've handled this the past few years has been going back and forth about who lists him as a dependent on taxes (we each have about half the nights/year). So he claimed kiddo for 2019 and will for 2021; I did 2018 and 2020. This mean that he got the first two stimulus payments (there were two last year, right? I can't remember) with the extra amount for our son last year (based on 2019 taxes). I filed 2020 taxes early enough this spring that I got the early Biden stimulus payment with the amount for the kid included. And here's where it gets tricky. I have a few related questions.

When I did my taxes through TurboTax, it said that it looked like I was owed some taxes based on my dependents. I now realize that this might have referred to stimulus payments, and TurboTax suggesting I was underpaid for my stimulus, but I don't know. Except that someone already got stimulus money in 2020 for this kid--my ex-husband did, based on 2019 taxes. So is this going to be a problem at some point? How do I even know? I don't have access to my ex-husband's taxes, but I am guessing he wasn't told he had to pay money back? I am guessing there isn't a way to look up my kid's social security number to see who got what for him when. If you know how the federal government is handling this and what I can do to figure this out, that would help. (I can also talk to my ex about this.)

Next, I just got my first payment for the new child tax credit. Except that my ex-husband will claim kid on taxes this year. I know I can stop payments, but I'd be interested to hear how other non-married/sharing custody parents are handling this. He and I haven't sat down and figured out who got how much when and how we should share that. We have an amicable relationship, so I think we could do that. But my understanding is that if I'm getting this payment now, and then I don't have this kid listed as a dependent on 2020 taxes, I will owe that money back when I file taxes, right? I don't know if my ex-husband got the money this month but I am guessing not.

Final question, not related, but it adds to the confusion. I was on partial furlough in summer of 2020 and got some unemployment (the federal stimulus and through the state, Oregon). Eventually there was a ruling/change that the first $10,000 or so of unemployment would not be taxed (I think), but I filed taxes before then, so I paid taxes on the unemployement added to my income, and I've gotten refunds from the IRS and Oregon since. But at this point, I have no idea what my taxable income is, and what my tax return should look like. I am concerned about two things: first, how do I know if I've gotten the right amount, and that I won't end up owing some big amount down the road? Next, my other kid (age 18) will be going to college and filling out a FAFSA soon, and I think he'll need some of my tax info for that, so I think I need the right numbers.

Phew, this is a lot. Thanks for any tips or insight you can offer.
posted by bluedaisy to Work & Money (5 answers total) 1 user marked this as a favorite
 
Best answer: For the last questions, you should request a transcript of your 2020 taxes here. I do not know that it would include the reduction for unemployment, but if it does that would give you all of the numbers you need for the FAFSA. If it doesn't, I think you should start preparing your 2020 return all over again on a different site but don't pay or file it. They will all be updated with the change and show you the adjusted amounts. Did you get any letter with the refund that shows your new amounts? Often they will include a restatement when adjusting your return. If the Feds did not and you can't get info from them, try the state. For both offices, try calling first.
posted by soelo at 2:12 PM on July 16


Best answer: The IRS rule is that if parents split custody 50/50, the higher earner gets to claim the child on their taxes. If one parent has more than 50% physical custody, that parent can claim the child as a dependent. Your situation from this past year is certainly complex and unique, and the 2020 particularities might make a session with a tax accountant worth your while, but going forward your tax situation would be simplified by hewing to the IRS rules about claiming dependents.
posted by little mouth at 4:24 PM on July 16


Best answer: Having just dealt with financial aid paperwork for my kid's upcoming 1st year of college, I say consult a tax professional because yes, you are about to have to provide tons and tons of data to FAFSA, to schools, to scholarship providers, etc. Some, like FAFSA, will have direct access to your tax returns so the days of fudging info or guessing is long gone.

At the end of 2020 we actually ended up having to do an amended 2019 return for Reasons and it affected our entire process. So yeah, get it all squared away now and you'll be in a much better position later for sure.
posted by BlahLaLa at 7:40 PM on July 16


Best answer: I came across this article today, and it reminded me of your post. I'm replying in case anyone has a similar question.

When I did my taxes through TurboTax, it said that it looked like I was owed some taxes based on my dependents. I now realize that this might have referred to stimulus payments, and TurboTax suggesting I was underpaid for my stimulus, but I don't know. Except that someone already got stimulus money in 2020 for this kid--my ex-husband did, based on 2019 taxes. So is this going to be a problem at some point? How do I even know?

Your ex husband will return the money to the IRS when he files his taxes, he doesn't get to keep the stimulus money without the dependent. So you will get the stimulus money you are entitled to, and the IRS will get the money they mistakenly paid your ex when he files taxes.

For my ex and I. He didn't get the payments in 2020 because we made too much to qualify based on filing as married in 2019, but when filing as head of household in 2020, he was able to get the payments as a lump sum, because he qualified for the payments filing on his own.

Next, I just got my first payment for the new child tax credit. Except that my ex-husband will claim kid on taxes this year. I know I can stop payments, but I'd be interested to hear how other non-married/sharing custody parents are handling this. He and I haven't sat down and figured out who got how much when and how we should share that. We have an amicable relationship, so I think we could do that. But my understanding is that if I'm getting this payment now, and then I don't have this kid listed as a dependent on 2020 taxes, I will owe that money back when I file taxes, right? I don't know if my ex-husband got the money this month but I am guessing not.

For my ex and I, he's keeping all the stimulus money. Even with a dependent, I don't qualify for the stimulus payments... Maybe it would be more "fair" to split the money. At the same time, it also seems needlessly complicated to do so. I guess you can work out how much it's worth and decide if it's worth the trouble to you.

For the last question. If they gave you a refund - they have your information, and they just refunded you some of the taxes you paid - I personally wouldn't worry about a big tax bill later. The FAFSA stuff I can't comment on.
posted by skunk pig at 10:50 AM on July 28


Response by poster: Thanks, all. These ideas and resources are quite helpful. I hadn't thought of running my taxes through another system. The info on the FAFSA and your approaches to this helped me muddle through it all.
posted by bluedaisy at 10:13 AM on July 29


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