There are several factors to consider in your situation, including who will claim the child, what filing status will each of you use, and who will claim the Child Tax Credit and any Dependent Care Credits?
First, let's review the rules for claiming a child on a tax return:
- The child must be a U.S. citizen, U.S. national or U.S. resident alien.
- Relationship test - you both qualify since it is your child.
- Residency test - in most instances, the parent who has custody of the child for more than half the year will claim the child. However, the custodial parent can release the Claim to Exemption with Form 8332.
- Age test - the dependent child must be under age 19, or under age 24 if a student.
- The child can't support himself/herself.
Both you and the other parent can qualify to claim your child as a dependent. Many people in your situation decide between themselves who will claim the child on their taxes or alternate tax years (e.g., father takes even years and mother takes odd years). Whoever claims the child is entitled to the Child Tax Credit for that year.
Regarding filing status, the custodial parent can file with the status Head of Household (HOH) and the other will file single (assuming you are both unmarried). In order to qualify for HOH status, you must be unmarried, pay over half the cost of keeping up the home where the child lives, and the child must have lived with that parent for over half the year. One day more is all it takes. Head of Household status provides a larger standard deduction.
The parent that had custody of the child for more than half the year can claim the dependent care credit for any child care expenses incurred, even if the other parent claims the child a dependent for that year.
Other considerations are whether one parent earns substantially more than the other. You can choose which parent claims the child as a dependent , but the parent who has the child for more than half the year gets the HOH status.
IRS Publication 501 provides more information. Here's a link:
https://www.irs.gov/pub/irs-pdf/p501.pdf
I hope you find this information helpful!
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