In such situations, the IRS has created tiebreaker rules, when two persons potentially have the right to claim a dependent.
If you cannot agree, the IRS has tiebreaker rules that would apply and she would win the argument with the first rule highlighted below. However, even though your daughter would be able to otherwise claim the Earned Income Credit (EIC) for the children, if she is also your qualifying child, she is not allowed to take the credit (Qualifying Child rules at the bottom). If your daughter's income is higher than yours, you may not claim the children for EIC.
This is not an easy topic. If you have any other questions regarding this, please feel free to post them in the comment section.
- If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent.
- If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents.
- If the parents don't file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for a longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year.
- If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year.
- If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. If the child's parents file a joint return with each other, this rule can be applied by treating the parents' total AGI as divided evenly between them.
Qualifying child rules:
- They are related to you.
- They aren't claimed as a dependent by someone else.
- They are a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
- They aren’t filing a joint return with their spouse.
- They are under the age of 19 (or 24 for full-time students)
- There is no age limit for permanently and totally disabled children.
- They live with you for more than half the year (exceptions apply).
