The phrases "joint custody", "primary custody", "legal custody", "shared custody", "50/50 custody", etc., don't appear in the tax statutes. Rather, when discussing dependents, the custody that matters is actual physical custody counted on a night by night basis, regardless of what type of custody is granted in a divorce or separation agreement.
In 2012, 50/50 physical custody is possible because the year has an even number of days. However, even if each parent had a child 183 then neither would be a custodial parent, because neither would have had the child more than 1/2 of the year.
The one who had custody for more than 1/2 of the year can claim the child as a dependent, child care expenses, earned income tax credit and, if eligible, Head of Household.
The custodial parent can transfer the exemption to the non-custodial parent by providing them with a signed copy of Form 8332. It is their choice to do so. If required to do so by a divorce decree or child custody agreement, and the child's other parent does not follow the agreement, your recourse is in the family court, as the IRS will not attempt to enforce such agreements.
