My ex-wife claimed both of our children as dependents for 2019 because I was behind in child support payments at the end of the year. I am now current and plan to claim one of the children per our divorce decree. When I attempt to add my daughter as a dependent in TurboTax, it states that she does not qualify as a dependent. I am assuming this is because of the situation from 2019 described above.
First question is "how does TurboTax know this?".
Second question is "how do I rectify this so that I can claim my daughter on my 2020 tax return?"
Which one of you is the custodial parent? The IRS cares about who the child lived with for the most nights.
Are you the custodial parent? Do you have an agreement with the other parent to allow the other parent to claim them--due to divorce or that you live apart and share custody? Did one of you sign a Form 8332?
If there is a signed 8332 then the custodial parent retains the right to file as Head of Household, get earned income credit and the childcare credit. The non-custodial parent gets the child tax credit for children under the age of 17.
As far as the IRS is concerned, the custodial parent is the one with whom the child spent the most nights during the tax year--at least 183 nights.
Thanks for the quick response. For the past five years (since divorce), each of us has claimed one of the children as a dependent. That changed last year (2019) when she claimed both because I was one month behind in child support. I did not fight it and figured it was a one-time deal. No 8332 form was signed at any point in the past - including for the only year that she claimed both children.
Both children live with their mother (my ex-wife) more than 180 days per year. However, our divorce agreement states that each of us can claim one of the children as a dependent until the oldest can no longer be claimed by anyone. At that point, we agreed to alternate claiming the younger child until she can no longer be claimed.
I guess I just cannot figure out how and why TurboTax knows that my ex-wife claimed both children last year and "does not allow" me to claim her as a dependent this year even though I answered all of the questions in such a way that she should be claimed as a dependent.
Any further help is much appreciated.
TurboTax does not "know" anything that you as the user did not enter. Delete your child and re-enter her as a dependent-- you answered something that did not allow you to claim her.