Some of the financial issues implicated by child custody arrangements and court orders are (1) child support payments; (2) payment for health insurance; and (3) the ability to claim the child or children as dependents for tax purposes. The Internal Revenue Service (IRS) rules dictate that the parent with whom the child spent the most nights during the tax year has the right to claim the child as a dependent. And if the child spends an equal number of nights with each parent during the tax year, the parent with the higher adjusted gross income (AGI) has the right to claim the child as a dependent. Sometimes the child custody court will order the parents to alternate years of claiming the child as a dependent.

In New York, financial considerations in child custody arrangements include child support payments, healthcare costs, and tax implications. Child support is determined by state guidelines that consider both parents' income, the number of children, and the amount of time the child spends with each parent. Health insurance for the child is typically required to be provided by one or both parents, and the cost may be factored into the child support calculation. Regarding tax deductions, the IRS rules state that the custodial parent, defined as the parent with whom the child spent the most nights during the year, is generally entitled to claim the child as a dependent. If the child's time is split evenly, the parent with the higher AGI may claim the dependency exemption. However, New York courts can order parents to alternate the years they claim the child on their taxes, which should be reflected in the custody agreement or court order. It's important for parents to adhere to both state and federal regulations when addressing these financial issues in custody arrangements.