Change in filing status and dependent

[Tina09]

Good afternoon, 

My divorce was finalized in 2024. As a part of the settlement, we agreed that we switch every other year on who claims our child as a dependent. 2024 tax year will be my year to claim a dependent. Just trying to get an idea what that will look like and if there are any suggested changes I should make to my withholdings for 2025 tax year as I will NOT be claiming a dependent for this year. 

[MarilynG1]

Since you no longer receive a dependent deduction after the tax law changes in 2017, you may receive up to $2,000 as a Child Tax Credit in the years you claim a dependent, which would reduce your tax owed. 

So if your withholdings are sufficient without the extra credit, you probably don't need to change them. 

Here's more info on the Child Tax Credit.

If the custodial parent qualifies for the Earned Income Credit, it is possible for that parent to claim that credit every year, and the non-custodial parent claim the dependency every year, which gives both parents a credit every year for that child.

This article has more details on Dependent Tax Deductions and Credits. 

[Hal_Al]

 Be aware that 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 it's his year to claim the child as a dependent.

You should let the ex know that she can claim these items, as not everybody knows about this rule. 

Ref: https://www.irs.gov/publications/p17#en_US_2017_publink1000170897

Scroll down to "Children of divorced or separated parents (or parents who live apart)"

*The IRS goes by physical custody, not legal custody.  The custodial  parent is the parent the child lived with for more than 183 nights in 2024