1) Can we choose who claims the child on their tax return?
No. The IRS has tiebreaker rules that decide who can claim the dependent. Typically, if you live together and file separately, the person with the higher adjusted gross income claims the dependents.
2) Based on #1 above, does it matter which of our health insurance the child is under?
No. It is appropriate to pay the least expensive. Also there is no tax deduction for it.
3) Based on #1 and #2 above, can one or both of us establish a Dependent Care FSA through our employer to pay for child expenses?
No. By default it will be the high earner spouse since the low earner has no child to reference the expenses too.
4) We believe we can still claim part of the child tax credit due to our married filing separately status but wanted to confirm.
If you're married filing separately, the child tax credit is not available for the total amount you'd receive if you filed jointly. You can take a reduced credit that's equal to half that of a joint return. You may be able to receive a partial benefit for the child and dependent care credit.
Only one taxpayer (or married couple filing jointly) may claim any one child for the purposes of the Child Tax Credit and the Additional Child Tax Credit. If a child is claimed as a dependent on more than one tax return, the IRS will determine who gets the claim according to a set of tiebreaker rules.
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