@jburatti since all three children live with you, you are the custodial parent. She is the non-custodial parent.
Since they all live with you, she can NOT claim HOH. She can not meet the requirement that the children lived with her as their main home and they lived with her for at least 6 months. She must file MFS. She can not meet the requirements of item 4 that I laid out above.
When you state that you two agreed that she can claim two of the children, she is claiming them as the non-custodial parent for the sole purpose of claiming the child tax credit. That is all. The children do not meet the IRS technical definition of a 'dependent'. You should provide her with form 8332 to document that your are permitting her to claim the CTC. CTC is worth up to $2,000 per child under the age of 17.
From what you state, you MAY be able to file HOH. However, you did not indicate whether you were separated for the last 6 months of 2023 (or were legally separated based on court papers presented to a judge). Otherwise it appears you meet the requirements of the other items I laid out above.
if you two lived apart the last 6 months of the year or were legally separated YOU can file HOH. If not, you must file MFS.
Lastly, if she filed HOH and you file HOH, it is quite possible that the IRS holds up your return because the same dependents with the same SSNs will be listed on both returns; the IRS will know there is a mistake. The same dependent can't qualify HOH filing on two tax returns in the same year. In fact, if you attempt to efile, it may reject because the same SSN has already been used as a dependent on another return. (if she claimed one of the children for the sole purpose of claiming CTC and that was properly entered on her tax return, that would not constitute using the same SSN on two tax returns).
She may have to amend and your return may 'hang' until that occurs (and you may have to paper file if the efile rejects).
does that make sense?
