The overriding principle of North Carolina’s custody laws are to serve the “best interests of the child”. There are two aspects to child custody – physical custody and legal custody. Physical custody is the time schedule that the child is in a parent’s care. Legal custody is the ability to make major life decisions for the minor child, including schooling, religious upbringing, and medical decisions.

Child custody issues can be among the most difficult to issues to resolve in a divorce matter because the law on the subject (“best interests of the child”) provides little guidance on how to resolve the issue. Until 1977, North Carolina had a statute giving presumptive preference in physical custody matters to the mother. As time has progressed and modern scientific research tending to show that children benefit from spending considerable time with both parents, many courts are much more inclined to award both parents joint physical (as well as legal custody) of the children.  Unlike other issues such as alimony or property division, agreements or court orders on child custody can be modified at any time, again, based on the “best interests of the child”.

By far and away the biggest tax consideration with child custody issues is the child tax credit, which can be worth as much as $1,000 per year per child, depending on income. In order to qualify for the child tax credit, the child must live with a parent for more than half the year. Other considerations include a phase-out beginning for single taxpayers beginning at $75,000 of taxable income per year.