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 Wisconsin, child custody arrangements and court orders often address financial responsibilities such as child support payments, healthcare costs, and tax implications. Child support payments are determined based on state guidelines that consider the income of both parents and the needs of the child. The court may also order one or both parents to provide health insurance for the child. Regarding tax matters, the IRS rules generally allow the custodial parent—the one with whom the child spends the majority of nights during the tax year—to claim the child as a dependent. If the child spends an equal number of nights with each parent, the IRS stipulates that the parent with the higher adjusted gross income (AGI) is entitled to the dependency exemption. However, Wisconsin courts can order parents to alternate the years they claim the child as a dependent, which overrides the IRS rule. This is often documented in the custody agreement or court order and requires the custodial parent to sign IRS Form 8332, releasing the exemption to the non-custodial parent for the specified tax year.