Q. Another thing is, the child doesn’t physically live with his dad but he is with his grandparents house. Can that make another argument or does that qualify any parent to claim the child?
A. The child doesn't have to live in the father's home, he only has to live with the father. So if the father and child live in the grandparent's home, the child still lives with the father. The father is still the custodial parent.
But, yes it does make another possible scenario. A child can be the “qualifying child” dependent of any close relative in the household. So, you may have three options:
- The father can claim the child, as custodial parent
- The father can allow the non custodial mother to claim the child using form 8332 (as he has apparently already agreed to do)
- He can allow the grandparents to claim the child. No form needed. There is an additional requirement: the grandparents must have a higher income (AGI) than the father.
On the other hand, if the child lives with the grandparents and did not live with either parent for more than half the year, then the grandparents are the only taxpayer that can claim the child (there's some unlikely scenarios where a parent could still claim the child, but more info would be needed).
