Head of Household while divorcing

[MItax216]

Confused on rules for claiming HOH status. Divorce was final January 2022. Two children. Ex has slightly >50% custody but that started after spending months with joint custody under same roof. We maintained separate homes for final six months. Adding custodial time to joint custody at beginning of year, we both had kids more than seven months. Can we both claim HOH or am I stuck with Married Filing Separately? I am claiming both children as dependents and she is claiming neither. If I cannot, does this mean she also gets claim to all my spending on childcare or do we claim what we individually spent?

[Bsch4477]

The key is who is the custodial parent. If she had the kids more nights than you in 2021, she is the custodial parent and claims the dependency, can file as Head of Household and claims child care and child tax credits. It doesn’t matter that you paid some of the child care costs. You file married, separately. 

[MItax216]

So if I had them for 65% of the nights in 2021 and she had them for 70%, she should claim HOH and 100% of the childcare spending? I was confused because the wording in TurboTax and tax code states "more than 50%" and not "more than the other parent". Because I had them for 7 months, the TurboTax software allows me to claim HOH but I'm not looking to get audited and penalized. It sounds like I will also need a signed form 8332 to claim both dependents if she qualifies as custodial and I don't.

[Bsch4477]

Yes, you need the 8332 to claim the dependency and get the child tax credit. But as the custodial parent she retains the right to file as Head of Household and claim EIC and child care credit even when you are claiming the dependency.