Dependent Care Expenses w/ Shared Custody

[NeileeBme]

There is a legal agreement stating which parent can claim the child on taxes each year.  This year the other parent claims the child, however, I have dependent care expenses for the child that the other parent did not contribute to.  Is there a way to claim them?

[Opus 17 · Accepted solution]

If you are following the law, only the parent who had physical custody more than half the nights of the year (184 or more nights) can claim the dependent care credit.  

Briefly, the IRS does not respect most court orders about custody, they make the determination based on where the child sleeps the most number of nights.  If that is you, you are the "custodial parent" for tax purposes.  The custodial parent is automatically entitled to all the tax benefits of claiming a dependent—dependent exemption, child tax credit, qualify for EIC, qualify for dependent care benefit, and qualify for head of household filing status.  The non-custodial parent gets nothing without the custodial parent's approval.

If you have an agreement that says the other parent can claim the dependent in certain years, the custodial parent needs to give the other parent a signed form 8332 (dependent release) for that year.  You can download it from the IRS web site or access it in turbotax under "Other tax situations."  Using the form 8332, the non-custodial parent can claim the dependent exemption and the child tax credit.  But the qualification for EIC, HOH and dependent care credit always stay with the custodial parent and can't be transferred. 

The non-custodial parent gets the dependent exemption and the child tax credit but can't claim EIC, HOH and dependent care credit unless they lie and say they had custody more than half the year.  If both parents claim this, one or both may be unable to e-file, so print your return and mail it in.  The IRS will eventually investigate the discrepancy and the parent who improperly claimed tax benefits will owe back taxes, interest and a penalty. 

[mariamirabela]

You wrote a long message, which is informative, but doesn't really answer the question. The question was not who can claim the child as a dependent; it was already indicated that the other parent will do that. The question was, if the other parent claims the child as dependent but you still have significant child care expenses, is there any way to deduct them? 

[Critter-3]

ONLY the custodial parent may claim the daycare expenses on form 2441 ... the non custodial parent is out of luck. 

[Hal_Al]

 Q. If the other parent claims the child as dependent,  but you still have significant child care expenses, is there any way to deduct them?

Simple answer: no.

But taxes aren't simple. First, only the custodial parent can claim the dependent care credit (DCC), regardless of who claims the child as a dependent. So, if the child lives with you, but the non custodial parent is claiming him as a dependent, then yes, you can claim the DCC.  If you want to argue that you have "joint custody" (which technically doesn't exist for tax purposes), then only the parent claiming the dependent can claim DCC. 

But, there is a way to "deduct" your costs.  Let the other parent claim what you paid on her return.  There is a  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 you paying the expense is just another form of child support  and therefore it was her money that paid for it.

[Opus 17]

@mariamirabela 
You are answering a very old discussion, you may want to post your question as a new question to give specific details to your situation.

The shortest possible answer is, only the parent who has custody more than half the nights of the year can claim the tax credit for child and dependent care expenses or use a flexible spending account (FSA) to pay for child care.  That tax benefit cannot be waived, transferred, or shared with the other parent even by a court agreement.