Sharing custody has become a more popular option for Mississippi families over recent years. While joint custody often works out great and allows children to maintain meaningful relationships with both parents, it also proves a little tricky when it comes to money. If you are sharing parenting time evenly with your ex, you need to be transparent and organized when it comes to finances.
It is always possible to modify child support obligations after a divorce is finalized, and sometimes it is even necessary. For example, you would probably want to make changes if you got a raise or your ex lost his or her job. Barring these exceptions, you want to do your best to get things right the first time around, so here are some things you may want to consider.
Who gets to claim your child on taxes?
Custodial parents usually have the right to claim children as dependents on their taxes. The IRS defines a custodial parent as the person a child primarily lives with during the year, which does not necessarily take joint custody situations into account. You and your ex will need to decide who gets to claim your child as a dependent for tax purposes, so you may want to consider alternating years.
You may want to consider the implications of who is considered the custodial parent if your child is getting ready to go to college too. His or her financial aid will be based on the custodial parent’s assets. If the custodial parent has more assets, it may be worthwhile considering modifying the custody agreement so that the parent with fewer assets is the custodial parent. This may improve his or her chances of securing necessary financial aid.
Decide on costs ahead of time
Since divorced parents are no longer working with shared incomes, managing shared child related expenses after divorce can be a challenge. You can address many of your childcare expenses in your support agreement, including how one parent will pay the other back for his or her share of certain costs. You may want to consider addressing some of the following:
- Health insurance
- Medical costs
- Extracurricular activities
- School supplies
- Unexpected expenses
It may feel counterintuitive to maintain open lines of communication after divorce, but it is important for your finances. If the cost of your child’s youth soccer league increases from one season to the next, you need to be prepared to address that with your ex. You should also consider agreeing on how to track your shared expenses.
Consider an emergency fund
An emergency saving fund should have enough to cover six to 12 months’ worth of expenses. You probably do not want to be caught unaware if you need to help with an unexpected child related expense, so it is a good idea to start building up an emergency fund as soon as possible. You do not have to immediately stash away that much money as this would be quite difficult, but building it up over time can prove worthwhile.
The financial implications of sharing joint custody can be somewhat confusing for divorced parents. It is not uncommon for misunderstandings to arise about who is responsible for paying certain expenses. As such, you may find it helpful to seek guidance when creating your child support agreement.