If both parents live with the child a "custody agreement" is not possible so it simply does not apply.
We (Superusers) have asked TurboTax for at least the last 3 years to change and clarify the wording on that screen to clearly state that it ONLY applies to parents that are divorced or separated and have not lived together at any time during the last 6 months of the year but it falls on deaf ears.
Every year many unmarried parents that live together answer this wrong because TurboTax refuses to acknowledge that unmarried persons can live together and have children and the legal concept of custody is not apparent to the average user.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
