When the divorce process is underway, people are frequently confused as to what they can and cannot do with regard to taxes. The vast majority of the time, litigants are better off financially by filing jointly for the year prior to the decree, and should resist the urge to saddle the other party with a large tax bill. Not only is this tactic costly at the time of filing, it is also counterproductive, as the filer will find themselves responsible for a share of the new tax bill (or the costs of an amended filing).
Another matter which confuses litigants is the ongoing issue of how to prospectively allocate deductions and exemptions for dependents after the entry of a decree. Kentucky courts have made significant changes in recent years regarding the allocation of tax deductions for children. The previous general practice of alternatively allocating deductions and exemptions regardless of the division of parenting time has gone by the wayside in new cases; in most cases IRS rules will control which taxpayer is allowed to claim the deductions and exemptions from the previous tax year.
Our courts definitively stated the following in 2015:
Thus we hold that the award of a tax exemption to a party who does not qualify for it under the Internal Revenue Code, and the attendant order requiring the otherwise entitled party to sign an involuntary " waiver" of his or her federal statutory right to claim the exemption against income taxes, requires the state trial court to meet the heavy burden of stating sound reasons that this award actually serves as a support issue benefitting the child. Otherwise, this is simply arbitrary action. (Whether parties can agree to a particular treatment of the dependent-child tax exemption is not before the Court.)
Contact your attorney prior to doing anything which may impact your tax filings if you are not already subject to an an agreement or order.