For tax purposes, there is no such thing as joint custody. The requirement is that they live with you MORE than 50%. One of you has to be the custodial parent and the other the non-custodial parent. If you really did have them exactly 50% (probability near zero since 365 days does not divide evenly), then the parent with the higher Adjusted Gross Income (AGI) is the custodial parent.
The custodial parent has first priority on claiming the children on her taxes; regardless of the amount of support provided by the non-custodial parent. The non-custodial parent can only claim the child as a dependent if the custodial parent gives permission (on form 8332) or if it's spelled out in a pre 2009 divorce decree.
There is a special rule in the case of divorced & separated (including never married) parents. When the non-custodial parent is claiming the child as a dependent (exemption), child tax credit & education credits; the custodial parent is still allowed to claim the same child for Earned Income Credit, Head of Household filing status, and day care credit. This "splitting of the child" is not available to parents who lived together at any time during the last 6 months of the year; then only one of you can claim the child for any tax reasons. The tax benefits cannot be split in any other manner.
Note in particular
that the non-custodial parent can never claim the Earned Income Credit, Head of
Household filing status or the day care credit, based on that child,
even when the custodial parent has released the exemption to him (he cannot claim the day care credit even when it's his year to claim the child as a dependent).
So, if you are the custodial parent, then YES you can claim the dependent care credit every year, If you are not, there's still good news. If your ex works, she can claim that credit, based on the money you paid. The general rule is that a taxpayer must actually make the payment (as well as be legally liable to pay it) to get the deduction. However, there is a recent tax court ruling that seems to say that she can take the deduction even if you were they one that actually paid it under the theory that your paying the expense is just another form of child support and it was her money that paid for it.
