When you're filing your taxes, how are your minor children filed? In general, minor children become dependents -- and that increases the amount that you can deduct from your taxable income. Putting in the appropriate deductions can greatly reduce the amount that you need to pay in taxes. However, you need to know a few things first. 

1. Only One Person Can Claim a Child as a Deduction

Even if custody is shared between parents, only a single person can claim a child as a deduction. Either parents need to file together (because they are married) or the child will need to fall under the tax return of the person with primary custody. The person with primary custody isn't always a parent. Sometimes a child is with a grandparent or other close family member. The deduction does not automatically fall to the parent.

2. When There's a Tie, the Person With Greatest Income Can Claim the Child

If both parents spend equal amounts of time with their child, then the person with the greatest AGI will be the one who can claim the child. This makes sense logistically, because it has the greatest tax savings for the child and their supporting parents as a whole. If the person with the greatest AGI isn't contributing the most to the child financially, this would be an issue with a family court, rather than a tax issue.

3. A "Child" Can Be Claimed as a Dependent Until 19 or 24

If a child is living with a parent, they can be claimed until they are 19 -- not the age of majority, 18. If the child chooses to go to college, they can still be claimed until they turn 24. This is the only situation in which a child can still be claimed even though they are not living with the claiming parent.

4. Children Can Still Be Claimed Past 24 In Special Cases

This is something that many people aren't aware of because it is not child specific -- instead, it has to do with the way the IRS processes dependents. Any close relative can be claimed as a "qualifying relative" on your tax return: they can become a dependent. But this is only true if they still live with you and if they make less than $3,700. Not only does this apply to children, but it also applies to parents, grandparents, aunts, and uncles.

It's very important for you to be aware of your qualifying dependents. As noted, they make a very large difference on your tax return. If you're not sure whether someone qualifies as a dependent, you should consult with an accountant like Zara Rhone CPA Inc. at the beginning of the year. This gives you the chance to adjust your payroll deductions accordingly if needed.