Dependent

[Lpnmdh]

I have two children ages 6 & 9 who live with me. Their dad and I were never married and split up in June 2018. We have a child support order stating I am the custodial parent. We do not having a parenting plan though. The kids live with me for more than 6 months of the year. We verbally agreed when we separated that we would both claim one child on our taxes which we did last year. I have been reading that I have the right to claim both children. Is that correct?  If so, he will be upset although he’s played dirty since we separated. He is a business owner and makes 4x what I make. I could use the money from claiming both kids. He does not need the money, but just very greedy. If I can claim them both, what happens if he still claims one of them?  Will I be in trouble?  Thanks!

[DoninGA]

The IRS goes by physical custody of a dependent child, so if the child lives in your home over 183 nights of the year then you are the custodial parent.

If someone claims a child on their tax return and the tax return has been filed and accepted by the IRS, then you will not be able to e-file your tax return.  You would need to print and mail the tax return and claim the child on your return.   If you have a tax refund the IRS will pay the refund.

Within a year the IRS will contact both parties by mail requesting that they amend their tax return if they were not eligible to claim the child as a dependent on their tax return.  If the IRS does not receive an amended return then they will contact both parties again requiring proof that the child was eligible to be claimed on the tax return.  The losing party gets to pay back any refund based on the child being a dependent plus penalties and interest.

[Hal_Al]

Q.  I have been reading that I have the right to claim both children. Is that correct?

A. Yes. 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 IRS goes by physical custody, not legal custody. 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. Even if a divorce decree, dated after 2008, gives the non-custodial parent the right to claim the child (or you verbally agreed that you would both claim one child on your taxes),  he must still get form 8332 from the custodial parent. The IRS will award you the tax benefits, if you claim the other child too.  Whether your verbal agreement is binding, is another question. But the IRS does not care. You get the benefits, if you claim them. Your ex's only remedy is to take you to court, for sanctions

That said, there is a way to split the tax benefits. This may be helpful in your negotiations with the ex:

 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; 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 may not 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 dependency to him.  That is, even if you don;t claim those benefits, he is not allowed to.

 So, it's good idea to let the other parent know that you will be claiming those items, as many first time divorced parents are not aware of this rule and may try to claim those items, which will cause the IRS to send out letters.

Ref: https://www.irs.gov/publications/p17#en_US_2017_publink1000170897

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Q.  Will I be in trouble?

A. No. As previously stated, the IRS will side with you. His only remedy is the courts. In fact, he may already be in trouble with the IRS, if he claimed EIC but the child did not live with him for more than 6 months. Since you split up in June 2018, he may meet the 6 month rule for 2018; but not 2019.