Additional references:
https://www.thebalance.com/claiming-same-dependent-audit-risk-3193030
http://taxes.about.com/od/dependents/qt/Dependents-Audits.htm
www.eitc.irs.gov/EITCCentral/f886-h-dep.pdf
You don't need
proof of support. You only need proof that you lived with the kids more than
half the year.
A
child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless
of the child’s income, if:
1.
He is under age 19, or under 24 if a full time student for at least 5
months of the year, or is totally & permanently disabled
2.
He did not provide more than 1/2 his own support. Note that the support test is
not how much support the taxpayer provided.
3. He lived with the parent (including temporary
absences such as away at school) for more than half the year
The mother-in-law will
also be asked to provide proof and she won’t be able to.
Going forward, For tax
purposes, there is no such thing as joint custody, regardless of what your legal agreement
says. The requirement, to be custodial parent, is that the child live
with you MORE than 50% of the time. One of you has to be the custodial parent
and the other the non-custodial parent. The IRS goes by physical custody,
not legal custody.
The custodial parent has first priority on claiming the children on her
taxes; regardless of the amount of support provided by the non-custodial
parent. The non-custodial parent can only claim the child as a dependent if the
custodial parent gives permission (on form 8332) or if it's spelled out in a
pre 2009 divorce decree. Even if a divorce decree, dated after 2008, gives the
non-custodial parent the right to claim the child, he must still get form 8332
from the custodial parent. A properly worded decree should require her to
provide that form. https://www.irs.gov/pub/irs-pdf/f8332.pdf. Be sure the tax issue is covered in the court papers
The real problem may be if the mother moves in with the grandmother and
the child lives there the most. Then, the grandmother can claim the child,
ahead of you. Or if the mother gets some part time work and files a return. It only takes a couple of bucks of income to file. The refundable child
based tax credits are very generous.
There is a way to split the tax
benefits.
This may be helpful in your negotiations with the ex:
There is a special rule in the case
of divorced & separated (including never married) parents. When the
non-custodial parent is claiming the child as a dependent/exemption/child tax
credit; the custodial parent is still allowed to claim the same child for
Earned Income Credit, Head of Household filing status, and day care credit.
This "splitting of the child" is not available to parents who lived
together at any time during the last 6 months of the year; then only one of you
can claim the child for any tax reasons. The tax benefits may not be split in
any other manner.
Note in particular that the non-custodial
parent can never claim the Earned Income Credit, Head of Household filing
status or the day care credit, based on that child,
even when the custodial parent has released the exemption to him.
So, it's good idea to let the other parent know
that you will be claiming those items, as many first time divorced parents are
not aware of this rule and may try to claim those items, which will cause the
IRS to send out letters.
Ref: http://www.irs.gov/publications/p17/ch03.html#en_US_2014_publink1000170897
Scroll
down to "Children of
divorced or separated parents (or parents who live apart)"
