My husband & I were granted custody of my husband's biological daughter in Dec of 2018
When it comes to taxes, when you were granted custody is totally and completely irrelevant. The IRS is not bound by your court order on this in any way, form or fashion. The IRS adheres to and enforces federal tax law. The only legal authority that can over ride that law is a federal judge. Since federal judges do not deal with custody cases, I can tell you with 100% certainty that will never happen. So here's how this works.
The below is straight from IRS Publication 17.
1.The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
2.The child must be
(a) under age 19 at the end of the year and younger than you (or your spouse, if filing jointly),
(b) under age 24 at the end of the year, a student, and younger than you (or your spouse, if filing jointly), or
(c) any age if permanently and totally disabled.
3.The child must have lived with you for more than half of the year.
4.The child must not have provided more than half of his or her own support for the year.
5.The child must not be filing a joint return for the year (unless that return is filed only to get a refund of income tax withheld or estimated tax paid).If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child
As you can see by item #3 above, if the child did not physically live in your household for at least 182 nights of the tax year, then you do not qualify to claim that child as your dependent. Period. It doesn't matter when you were granted custody. It onl y matters what you can prove to the IRS concerning item #3 above. So the mother very well may qualify to claim the child as her dependent.
we are afraid her mother will try to claim her on her taxes. How can we prevent this from happening?
Bottom line is, you can't prevent anything. But if both parties claim her, then both parties will be audited anywhere from 24 to 36 months after you file. The losing party (which very well may be you, but I don't know that for a fact) will pay back some taxes long with interest and penalties.
