Which Parent Can Claim Child As A Dependent?

Can I Claim a Child on My Taxes? Who Can Claim Child As A Dependent?

Divorce attorneys are frequently asked “can I claim my child as a dependent on my taxes?” The right to claim the child tax credit is an important and overlooked aspect of a divorce. Determining who claims a child as a dependent on their taxes after a divorce is a significant issue that affects not only the financial situation of the parents but also the child’s welfare. This decision can impact eligibility for various tax benefits, including the Child Tax Credit, Earned Income Tax Credit, and deductions for child care expenses. The rules governing this matter are detailed in the Internal Revenue Code and have been elaborated upon through various IRS publications and guidelines.

Legal Framework for Determining Who Can Claim Children As Dependent on Taxes

The Internal Revenue Service (IRS) sets forth specific criteria to determine which parent is eligible to claim a child as a dependent after a divorce. According to the IRS, only one parent can claim a child as a dependent in a tax year, essentially preventing both parents from benefiting from the same tax advantages for the same child simultaneously.

Dependent Child on Taxes – Custodial vs. Non-Custodial Parent

The primary determinant is custody of the child. The child’s custodial parent – the parent with whom the child lived for the greater number of nights during the year, as set forth in the IRS’ article “Claiming a child as a dependent when parents are divorced, separated or live apart.”   The IRS typically grants the custodial parent the right to claim the child as a dependent, assuming all other qualifying conditions are met. This right is irrespective of the divorce decree or any financial contributions made by the non-custodial parent towards child support.

Special Rule for Divorced or Separated Parents Determining Right to Claim Child on Taxes

There is a special rule that allows the non-custodial parent to claim the child as a dependent if certain conditions are met. This is only possible if the custodial parent signs Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or a substantially similar statement. This form or statement must be attached to the non-custodial parent’s tax return. The custodial parent can revoke this agreement for future tax years by providing written notice to the non-custodial parent. Parents are also encouraged to review IRS form 8332.

Multiple Support Agreement and Claiming a Child as a Dependent for Tax Purposes

In some cases, a child may not qualify as a dependent for any one parent under the usual rules, perhaps because the child did not live with one parent for more than half of the year. In such situations, a multiple support agreement may come into play. This agreement allows several taxpayers who together provide more than half of a person’s support to agree among themselves who will claim the person as a dependent. However, this is more commonly applied to dependents other than children of divorced parents.

Tiebreaker Rules for Determining Who Can Claim a Child as a Dependent for Tax Purposes

If there is any dispute or uncertainty about who has the right to claim the child, the IRS has established “tiebreaker rules.” These rules prioritize the custodial parent over the non-custodial parent. If the child spent an equal amount of time with both parents, then the parent with the higher adjusted gross income (AGI) is given the right to claim the child.

Who Claims a Child on Taxes With 50/50 Custody?

When parents have 50/50 custody, determining who claims the child on taxes can become complex because IRS rules are designed to assign the tax benefits to one parent. In cases of equal physical custody, several factors and IRS tiebreaker rules come into play to resolve which parent is eligible to claim the child as a dependent and other associated tax benefits.  According to SmartAsset, when parties share a 50 / 50 custody arrangement, the test is whether one party has the child or children for a greater number of day than the other party for that tax year.  In the event that the child spends exactly the same amount of time with each party, the party with the higher Adjusted Gross Income is entitled to claim the child as a dependent.

Impact of Tax Cuts and Jobs Act on Claiming a Child as a Dependent

The Tax Cuts and Jobs Act (TCJA) of 2017 brought significant changes to tax exemptions and credits related to dependents. For tax years 2018 through 2025, the TCJA eliminated personal and dependency exemptions. However, it increased the value of the Child Tax Credit and introduced a new credit for other dependents. These changes make it even more crucial for divorced or separated parents to understand who has the right to claim tax benefits related to their children.

Best Practices For Filing Taxes and Claiming a Child as a Dependent

Given the complexities and potential conflicts surrounding this issue, best practices suggest that divorced or separated parents should:

• Clearly outline the terms of claiming dependents in the divorce decree or separation agreement, considering the tax implications.
• Consider alternating years for claiming the child as a dependent if it provides a financial benefit to both parties.
• Communicate openly and collaborate on tax-related decisions to ensure that both parents maximize their potential tax benefits without violating IRS rules.

Determining which parent has the right to claim a child as a dependent after a divorce involves a careful consideration of IRS rules and regulations, as well as the specific circumstances of the family. Custodial arrangements, the child’s residence, and agreements between parents play significant roles in this determination. Proper understanding and application of these rules can lead to optimal tax outcomes for both parents, ultimately benefiting the child. Given the potential for conflict and misunderstanding, it may be beneficial for parents to consult with a tax professional or attorney to navigate these issues effectively.